Economic narrative in a shifting pattern
For months now, the economy has been much stronger than political coverage — and therefore, public polling — has suggested. And though it wasn’t only in the past few weeks that 14 million jobs were created, inflation dropped below 4% and wages exceeded inflation, the coverage of the economy certainly has shifted quickly and dramatically.
Each bit of news is reported as confirmation that finally the economic outlook has brightened. “Americans are rapidly becoming much more upbeat about the economy,” the Wall Street Journal reported last week. “Consumer sentiment surged 29% since November, the biggest two-month increase since 1991, the University of Michigan said Friday, adding to gauges showing improving moods.” Hmm, that suggests for several months now the media continued to paint a dreary picture of the national mood when, in fact, consumers were feeling something quite different. Apparently, ordinary Americans clued in to the real state of the economy far sooner than the many in the media did.
When an article insists that this marks a “sharp turn after persistently high inflation, the lingering shock from the pandemic’s destruction and fears that a recession was around the corner had put a damper on feelings about the economy in recent years, despite solid growth and consistent hiring,” you have to wonder whether the gap in perception was thanks to overly negative coverage. (A recent Brookings Institution study concluded that “economic news has become systematically more negative … with the negative bias growing over the last three years.”)
Americans’ increasingly positive outlook is reflected in the markets, which have soared to new highs. “The S&P 500 closed at an all-time high on Friday as investors returned to buying equities in force following a short-lived market stumble to start the new year,” CNBC reported. “The broad market index rose 1.23% to settle at 4,839.81, surpassing both the prior record intraday and closing highs from January 2022. Meanwhile, the Dow Jones Industrial Average, which set its own record at the end of last year, added 395.19 points, or 1.05%, to end at 37,863.80.”
Much of the media appears to be scrambling to catch up to reality. That has significant political implications for President Biden, whose economic success has been played down, dismissed or ignored — on the grounds that the public does not feel better. Well, now there is no excuse for the derisive coverage of Biden’s economic stewardship.
The Post reported: “Rising sentiment among both Democrats and Republicans comes at a critical moment for the Biden administration, which has struggled to convince voters that its economic policies are making their lives better ahead of November’s presidential election.” That means “Democrats are cautiously optimistic that improving views of the economy will boost President Biden’s chances in the election, after months when inflation and voter fury over the economy appeared to be intractable political problems.” (Just days before, The Post reported that Biden was not getting credit.)
Biden is getting to take a belated victory lap. In North Carolina on Friday to tout new investment in high-speed internet, he told the audience, “If you look at the consumer confidence, it’s way up. Sixty-four percent — I think it may be 62% of Americans think their personal circumstance is good and it’s getting better.” He added that, “thanks to the Investing in America agenda, private companies have invested over $640 billion — let me say it again — $640 billion in advanced manufacturing here in America.”
The president gleefully took shots at fourtime indicted former president Donald Trump, who used to boast about the stock market. “We’re doing pretty ... well economically and we’re getting better. He wants to see the stock market crash. You know why? He doesn’t want to be the next Herbert Hoover,” Biden joked. “As I told him, he’s already Hoover. He’s the only president to be president for four years and lose jobs, not gain any jobs.”
In short, the economy has been doing remarkably well for months now, and consumer sentiment improved, though many in the media weren’t paying attention. Now, both economic sentiment and coverage have caught up to reality. That might be why Republicans have so little to say — and even less to offer — about the economy, other than vague promises of more tax cuts for the wealthy.
Biden might get one more feather in his cap before November — on taxes. Yahoo Finance reported on a bipartisan deal in the works: “A proposed tax package that would temporarily boost the child tax credit while providing more generous deductions for business investments would be fully paid for by the early elimination of a pandemic-era employee retention credit.” That is consistent with his determination to end “trickle-down” economics in favor of building the economy from “the bottom up and the middle out.” (As Yahoo reported, “an analysis by the Urban-Brookings Tax Policy Center found that about half of all households with children in the lowest 20% of the income distribution would get a tax cut from the legislation, while just 2.6% of those in the middle quintile would benefit.”)
If the economy remains the most important factor in the presidential election, as it traditionally has, then the president who can claim robust job gains, lower inflation and gas prices, major high-tech and infrastructure investment, and rising stock prices and consumer sentiment might be in a better position for reelection than many pundits predicted. Get ready for the “Biden comeback” stories.