(Yahoo!Finance) - If you’re like most Americans, you think everything is terrible — and you’re forcing pollsters and economists to find new theories to explain why you’re so bummed out.
For much of Joe Biden’s presidential term, consumer attitudes have been woeful. Inflation seemed like a good explanation. It peaked at 8.9% in June 2022, the highest level in 40 years. For a while, the cost of rent and food was rising by two or three times as much as incomes. That helped drive the University of Michigan’s sentiment index to a record low in 2022.
Inflation has fallen back toward normal levels, and some things are actually getting cheaper. Job growth is still strong, the economy is growing, and stocks are up. In normal times, that would coincide with a snappy improvement in confidence and increased optimism.
But that doesn’t seem to be happening. The Michigan sentiment index has ticked up a bit, but it’s still around the depressed levels of late 1981, when inflation was close to 10% and a recession was underway. Consumers are almost as dejected now as they were in 2009, when the nation was emerging from Great Recession and the unemployment rate was approaching 10%.
Pervasive gloom seems to be a new feature of America. In NBC News polls, 73% of respondents say the United States is on the wrong track, the highest portion since 1989, when that polling series began. In similar Gallup polls, there’s been a prolonged downward trend in Americans’ satisfaction with the direction of the country, from a peak of 71% in 1999 to just 22% today.
Biden feels this most acutely in his dismal approval ratings, which sank as inflation worsened in 2022 and have never recovered. Biden’s 39% approval is the lowest of any president running for a second term a year out from Election Day, which is obviously grim news for his reelection odds.
With voter attitudes seemingly detaching from economic conditions, experts are trying to conjure new explanations for why everybody’s in a foul mood. Here are a few of them:
Select pain points. While the inflation rate is declining, the cost of food, rent, and transportation is still elevated compared with pre-COVID levels of 2019. Affordable housing is a particular problem in some areas. So Americans vulnerable to these budget-killers might remain quite pessimistic even as overall inflation drops.
Still, that doesn’t seem to explain how widespread the malaise is. Millions of homeowners, for instance, were able to lock in super-low mortgage rates a few years ago, which was a major money-saver offsetting other types of inflation. If those people are enjoying the savings, it’s not showing up in confidence surveys.
Debbie Downers everywhere. Some researchers think the overall tone of news people hear is growing more negative, causing more sour attitudes in general. Two Brookings Institution economists wrote a recent study finding that “economic news has become systemically more negative beginning in 2018, with the negative bias growing over the past three years.” Moody’s Analytics reached a similar conclusion in a 2023 study, linking more negative news to the explosion in digital information sources during the last decade. Others have pointed to a gray-zone “outrage industry” whose whole purpose is to get people riled up and promote polarization, even when things are good.
“Referred pain.” This hypothesis comes from Greg Ip of the Wall Street Journal, who speculates that Americans watching scourges such as mass shootings, immigration chaos, overdose deaths, and overseas wars simply feel bad about everything. So when pollsters ask their views on the economy, they get a negative response, because people just feel overwhelmingly negative. If there’s truth to this, voters may actually be more upbeat on the Biden economy than poll numbers suggest.
Political fatalism. Paul Krugman of the New York Times points out that Republican views on the well-being of the country tend to flip dramatically when Republicans lose power to Democrats, as happened when Joe Biden displaced Donald Trump as president in 2021. Republicans, accordingly, have the bleakest outlook for the economy and the nation. Democratic views shift too when their own party gains or loses power, just not as much. Krugman postulates that Trump supporters who believe the lies about Biden stealing the 2020 election are so apocalyptic that they skew the whole nation’s outlook — which seems like a bit of a stretch, honestly.
At any rate, the recurring theme is that something other than economic fundamentals plagues the nation, sapping optimism. This might be good news for Biden, if his economic performance isn’t as much of a liability as traditional metrics suggest. But it would also mean that Biden, who considers himself a sunny guy, cannot muster the mojo to break America out of a deep funk.
The question is, can anybody?
Rick Newman · Senior Columnist
