What Do They Mean When They Tell Us the Economy Was "Good?"

Part of the narrative to which the "It's Not the Economy, Stupid" crowd is sticking in regard to the U.S. national election of 2024 is that the economy was in fact "good" before and at the time of the election, and that as a result either economic discontents had no part in the election's outcome (never mind the polls indicating how many of those aggrieved over inflation voted Republican), or that the public had been deceived about the reality of the economy's performance.

I have already argued for the falsity of this position. But even having done so it seems worth saying something more of how those in the media commonly attempted to argue that position to the broader public, namely by citing a handful of statistics. To cite two of the most important they reported unemployment at 4 percent, and inflation falling toward the 2 percent level. Conventionally regarding these as excellent numbers even in ordinary times, never mind in the wake of the historic shocks of recent years (the COVID-19 pandemic immediately spiking unemployment, and spiking inflation as well in later but more prolonged fashion), they said "See? No problem. So what have you got to be so glum about?"

In doing so they overlooked all that those who calculated these numbers did not even presume to represent. In speaking of unemployment they speak of "U-3" unemployment normally--just one of six ways of measuring employment reported every month, while giving no thought to the still other ways of considering the extent of unemployment, like examination of the percentage of people who have dropped out of the labor force. (The reality is that as of November 2024 the Labor Force Participation Rate. just 62.5 percent, had not recovered to its pre-pandemic level of 63.3 percent at the start of 2020--and the 66 percent it was before the Great Recession that, I remind you, never truly ended.) It certainly does not account for, for example, the college graduates who have a job but are "underemployed" in the sense of taking a job not requiring their expensively bought credentials, and paying them less (a far more common problem than most seem realize).

Just as is the case with the talk about unemployment, those who talk about inflation tend to go by one specific measure, the Consumer Price Index--which certainly has its uses, but at the same time fails to account for a very great deal. It does not include food and fuel, for example, and dealing with them indirectly fails to fully capture rises in the price of housing or health insurance, which have not incidentally consistently outpaced official inflation measures. There is a tendency, too, to overlook subtler aspects of these matters. Consider, for instance, how rises in food prices hit low-income persons who cannot switch to "cheaper" brands because they already buy what is cheapest--and the fact that inflation tends to raise the prices of the lowest-cost items more than the average (because the margins here are slighter than with many more expensive products, making producers quicker to pass on higher costs to the consumer).

When one considers all this it is easy to see how supposedly "good" numbers do not necessarily seem so, all as one should remember that the Talking Heads' consideration of the economy is very, very short-term, telling us how things stood this month, this quarter, at most this year. In reality people's perceptions of their well-being are not shaped simply by how well-off they are at the moment, especially when long-term trends are at work--as is the case with those prices for many necessities relative to incomes. Consider how, for example, between 1973 and 2023 the median house price rose about twice as fast as the Consumer Price Index overall (the CPI going up by a factor of 6.9, the median house price by a factor of 13.3 over the same period)--a far from insignificant difference after all that time, and from the standpoint of most people's incomes, which did not do much more than keep pace with the CPI over the long term, all as, again, all this had parallels in other areas, like health insurance and education and the price of a car (in a country which expects anyone who wants to have a job to be able to drive there!). When they have experienced that long deterioration of their purchasing power with its associated stresses, amplified by the recent spiking of prices in the wake of the pandemic, a single quarter or single year of stability in the relation of incomes to prices is just not going to make that much difference (not that they got it). Indeed, Alan Greenspan himself made the point in Congressional testimony in the '90s when discussing the lack of upward pressure on wages amid what the Talking Heads (as superficial and dishonest then as they are now) told the public were "boom times" for them--observing that the American worker, made insecure by painful past experience, went on being so, giving rise to talk of "Traumatized Worker Syndrome" (all as, with a further generation's hindsight, the trauma would seem to have been just beginning).

Considering all this the discrepancy between the lived experience of the public and what their media tells them about their lived experience is appalling--and if the public has often believed the media rather than reality that has often been because drawing conclusions about that reality from the data was sufficiently beyond them that they could be deceived. The prices they pay at the grocery store have been another matter, however--with the results we have seen in public sentiment about the economy, no matter how much the "experts" clutter up the editorial pages of papers of record telling them their experience of being worse off is "all in their mind."