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Americans Aren’t Buying the “Great Economy” Narrative

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The Fed people insist the economy is strong. They upped their GDP growth projections at their last meeting. Joe Biden thinks the economy is strong. He keeps bragging about the marvelous achievements of “Bidenomics.” Mainstream economists keep telling us the economy is strong.

But the average American isn’t buying any of it. (Perhaps price inflation makes it too expensive?)

After tanking in August, consumer confidence dipped again in September, falling to the lowest level in four months.

The Conference Board’s Consumer Confidence Index fell to 103.0 this month from an upwardly revised 108.7 in August. That was worse than the consensus projection of 105.5.

People’s expectations for the future continue to tank. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 73.7 in September. That follows a plunge to 83.3 in August.

An Expectations Index below 80 generally signals an impending recession.

Americans also continue to fret about rising prices, despite assurances from Paul Krugman who recently insisted the inflation war is over.

September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

According to the Conference Board, “When asked about current family financial conditions (a measure not included in calculating the Present Situation Index), the share of respondents citing a ‘good’ situation fell again, and those citing ‘bad’ conditions rose, signaling rising concerns about current family finances.”

Consumer confidence still hasn’t recovered to pre-pandemic levels. In the three to four years prior to the pandemic, the consumer confidence index generally ranged above 120.

Disconnect

There seems to be a disconnect between the average American’s perception of the economy and the views held by economists, pundits and government officials.

A recent CNN report touted “Biden’s strong economy” and asked why it “feels so bad” to most Americans.

By almost any objective measure, Americans are doing much better economically than they were nearly three years ago, when President Joe Biden took office. Still, a majority — 58% — say Biden’s policies have made economic conditions worse.”

In other words, why can’t these dumb rubes understand how good they have it?

University of Michigan economist Justin Wolfers insists there is “literally no question” that the economy has improved under Biden.

The problem is politicians and their courtesans in academia and the media don’t live in the real world. They live in a world of data and spin that they can manipulate to formulate a narrative. But narratives don’t matter to a couple in the checkout lane at the grocery store trying to figure out how they’re going to pay for food this week.

These two headlines tell you just about everything you need to know about the political and pundit class and their disconnect from normal life.

Consider this spin from the CNN article. Americans are obviously doing fine because they are spending money, and that’s keeping the US economy “humming.”

“Put another way: People are spending like they’re in a good mood, even if they say they’re not,” our intrepid CNN reporter exclaims.

Perhaps American consumers are not in a “good mood” because they’ve blown through their savings and they’re now keeping up this “spending spree” with credit cards.

You see, in the real world, people don’t just spend money when they want to. Most of us have to fill up our vehicles with gas, buy groceries, and pay our rent or mortgage, whether we want to or not. And if we don’t have the cash on hand, we have to charge it.

No wonder people are grumpy.

Or consider this: economists and Fed officials insist that price inflation is cooling. But they remove food and energy prices from the discussion and fixate on “core inflation” to make their case. That sounds good in a news report or an op-ed, but it falls a little flat for the average person who can’t just X food and energy costs out of their budgets.

But what about jobs? There are plenty of jobs! People should be happy.

Of course, when you dig into the data and shovel passed the spin, you discover that more and more people are working two or more jobs just trying to make ends meet. That accounts for a lot of the
“job creation.” Not to mention the fact that after trumpeting big job numbers one month, government people go back and quietly revise the numbers down the following month. You never hear about that in the headlines.

So, yeah, you can take the data and spin this into the greatest economy in history. But real life doesn’t care about politics and spin. People understand their own economic reality. And they’re not happy about it.

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About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
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