Why is economic sentiment still so negative?

A new survey from Harvard’s Center for American Political Studies finds:

• 63% of voters believe the U.S. economy is on the wrong track and 62% characterize it as weak, consistent with perceptions over the past year.
• 42% of voters named inflation as the most important issue facing the country today, up 5 points from July.
• 48% of voters say their personal financial situation is getting worse, especially among female (53%), 55-64 year-old (55%), and rural (57%) voters.

Now the kneejerk reaction among We Enlightened Few is to Blame the Media. However:

People who have more negative views of the economy are more likely to base their rating on their personal experiences or what they’re hearing from others, which tends to be more negative as well, Joanne Hsu, the director of the university’s Surveys of Consumers, told CNN, based on a recent poll her team fielded. Whereas if you get most of your information about the economy from a news outlet, there’s a higher likelihood you’ll have a more optimistic view of the economy because you’re more likely to come across elements that paint it in a more favorable light.

Also known as “facts.”

But the average American does not wait for news to come out to form an opinion on how the economy is functioning, she said. “They’re really relying more on their observations of the world around them.”

Look, I get that people who get their “news” from Fox and its epigoni believe the economy is bad, because those people are being fed fascist propaganda 24/7. But that’s really not a very large percentage of the population overall, and in any event the percentage of people who are convinced the economy is terrible includes a a large percentage of Democratic voters, given that close to two-thirds of Americans seem to “feel” this way.

We’ve talked a lot about inflation on the blog over the past couple of years, and I get that the fact that the CPI is now at 2.4% (far below the average inflation rate over the lifetime of the average American voters in other words) doesn’t completely ameliorate the psychological consequences of the fact that nominal prices have gone up by 20% over the past four years. But nominal incomes, after lagging during the high inflation of 2022, have just about caught up now: Household income at every decile is very near its historical high, and much higher than it was back when America was great, if by that moment you mean any time prior to 2019 (2023 incomes and 2019 incomes — the all-time high point — are basically statistically indistinguishable, and 2024 incomes are almost surely higher).

Unemployment is very low in both historical and absolute terms. If we’re going to go the anecdote route, I’m struck by how many Gen Zers of my acquaintance switch jobs regularly, because the labor market is so tight that they know they have the option to do so.

Yes, I get that those same people are very often finding it impossible to buy property, because housing prices are ridiculously high in so much of America. That is absolutely a huge problem. So is student debt, because of the endlessly rapacious rent seeking of our absurd higher education system. So are health care costs, because of the massive inefficiencies of our absurd health care system.

Plus I don’t doubt that what’s been labeled “enshittification” is a huge factor in economic sentiment. This is the process by which information technology is used by consumer capitalism to try to squeeze every last potential dime out of every possible transaction, which leads to people getting the impression they’re getting less of what they paid for, because they very often in fact are getting less, because some private equity pirate used The Algorithms to make something worse than it was five years ago, whether that thing is a pastry or an emergency room visit.

Still, it’s sobering to consider that these factors have produced a distorted enough sense of both the economy and of what Donald Trump et al. would do to it that the election is as close as it is.