The Economy That Republicans Don’t Want to Talk About

By Jim Geraghty

Monday, July 31, 2023

 

Judging from the latest CBS News/YouGov poll, the American electorate is more than ready for change. It’s itching for change.

 

When asked how “things in America today are going,” just 5 percent of American adults answered, “very well,” and 23 percent answered, “well.” Another 36 percent answered, “somewhat badly” and 35 percent said, “very badly.” The answers were similar when the pollster asked respondents to rate the state of the economy — 29 percent offered some version of “good,” and 65 percent responded with some version of “bad.” Just 21 percent said the economy is getting better, and 58 percent said it was getting worse.

 

CBS News asked respondents which words they would use to describe the state of the economy.

 

The most common answer was “struggling,” at 61 percent. The second most common answer was “uncertain” (56 percent), followed by “unfair” (36 percent) and “punishing” (27 percent). Only 15 percent selected the positive “rebounding.”

 

I remind you, President Biden recently unveiled a new messaging effort focused on “Bidenomics.”

 

You don’t have to look too hard to find Biden supporters who insist that these Americans are just perceiving the economy incorrectly — perhaps a “false consciousness,” as the old Marxists would describe it. In their eyes, the national unemployment rate is low, the year-to-year inflation rate is much better than last year’s four-decade high, and the stock market is booming, so Americans who perceive economic hard times are just a bunch of ingrates who don’t realize how good they have it under President Biden.

 

Back in May, New York Times columnist Paul Krugman entitled a column, “Why Are Americans So Negative About the Economy?” He noted, “You don’t want to say that Americans are stupid; you certainly don’t want to sound like that John McCain adviser who insisted that America was a ‘nation of whiners’ who were experiencing only a ‘mental recession.’ On the other hand, there are now huge gaps between what people say about the economy and both what the data says and what they say about their own experience.” Krugman concluded that it wasn’t stupidity but Republican messaging: “Partisanship surely explains much of this divergence.” He also added, “There’s good reason to believe that media reports about the economy have had a strongly negative bias.”

 

But in the CBS News poll, nearly half of all self-identified Democrats shared in the gloom, with 34 percent saying things in the country were going “somewhat badly,” and 15 percent saying, “very badly.” Among self-identified independents, 39 percent said things were going “somewhat badly,” and 40 percent said, “very badly.” And when asked to rate the economy, 29 percent of Democrats said, “fairly bad,” and 15 percent said, “very badly,” adding up to 44 percent. Among independents, 41 percent said, “fairly bad,” and 31 percent said, “very badly,” adding up to 72 percent.

 

If, as Krugman contends, reflexive partisanship is what makes people perceive economic hard times, those numbers shouldn’t be anywhere close to those levels among Democrats and independents.

 

CBS News and YouGov followed up among those who said they think the national economy is “fairly bad” or “very bad,” giving them a list of options to explain why they think the economy is bad. Respondents were able to select more than one option. Remember, 71 percent of respondents rated the economy negatively, so it is reasonable to assume a roughly similar majority of the electorate and population as a whole feel that way.

 

Almost all of those who rated the economy negatively, 88 percent, selected “inflation and rising costs of goods and services” as one factor. Another 76 percent answered gas prices; the U.S. Energy Information Association, which updates its figures weekly, puts the national average price of a gallon of unleaded gas at $3.68, and the American Automobile Association, which updates its figures daily, puts it at $3.75. Another 72 percent selected “housing costs” as a reason, and 55 percent answered, “don’t trust the Biden administration.”

 

Economist Justin Wolfers contends there’s a revealing split between people’s perceptions of their own economic condition and the condition of the country: “Ask ’em what they’re doing and they tell an optimistic story. Ask ’em how it’s going, and they tell pessimistic stories.” No doubt there’s something to that, although in any circumstance, half of all Americans will be in an economic condition that is better than the median. There’s nothing inherently contradictory about doing well personally but worrying about economic opportunities for those around you who aren’t as lucky, skilled, or well-situated.

 

In the CBS News poll, responses to questions about people’s personal situation are better, but not overwhelmingly better. When asked, “How would you rate your own personal financial and economic situation today?” just 9 percent answered, “very good,” 40 percent said fairly good, 28 percent said fairly bad, 16 percent said “very bad,” and 7 percent said they weren’t sure.

 

CBS asked the 44 percent who rated their personal financial situation as “fairly bad” or “bad” why they rated their situation that way. Again, inflation and sticker shock were a nearly universal factor, with 85 percent saying “prices,” 71 percent saying “unable to build savings,” 52 percent saying “don’t have enough to pay bills,” 50 percent saying “housing costs,” and 48 percent answering “debts.”

 

I think there’s a sizable gap between inflation as it is discussed by the professional economists and the way average Americans think about it. The most recent U.S. CPI numbers indicated that the all-items index increased 3 percent over the last twelve months, the smallest twelve-month increase since the period ending March 2021. Most economists would look at that and cheer, focusing on the change in the inflation rate since last year.

 

But that still means that the prices for all goods combined in May 2023 were 3 percent higher than in May 2022, when Americans were reeling from skyrocketing prices. And once you dig deeper into the numbers, the good news is that energy is cheaper than it was in May 2022 — fuel oil is 36.6 percent lower, gasoline is 26.5 percent lower, and used-car prices are 5.2 percent lower. But food consumed at home costs 4.7 percent more in May 2023 than May 2022, food consumed away from home is 7.7 percent higher, new vehicles are 4.1 percent higher, shelter is 7.8 percent higher, and transportation services are 8.2 percent higher.

 

In other words, people go about their economic lives and accurately perceive that a lot of stuff — food, shelter, new cars and other transportation services in particular — is still considerably more expensive than it was last year, which was in turn a lot more expensive than it was the year before that. Economists measure inflation by the change in the rate of increase of prices, while most consumers measure inflation by the change in the prices.

 

Indeed, in that CBS News poll, 69 percent of respondents said that prices on the goods and services that they buy have been going up, while just 6 percent said “going down” and 25 percent said “staying the same.”

 

Americans get constant reminders of how much the cost of living has skyrocketed since the Covid pandemic every time they go to the grocery store, make a run to a big-box store like a Walmart or a Target, fill up their tank, go out to eat on a weekend evening, conclude it’s time to trade in their used car, or need an unexpected home repair. (How many people’s air-conditioning units always seem to break down during a heat wave?)

 

Wage growth doesn’t help anybody if prices rise faster. In fact, the CBS News poll asked respondents directly, “Do you feel like income from your work is or is not keeping up with inflation?” Thirty percent said it was keeping up, and 70 percent said it wasn’t.

 

Presidents traditionally get too much credit for a good economy and too much blame for a bad one; this situation has not changed much under Biden. When asked, “How much do you think Joe Biden’s policies are responsible for the current state of the economy?” 44 percent answered “a great deal,” 36 percent said “somewhat,” 15 percent said “not very,” and 5 percent said “not at all.” When asked, “How much do you think Joe Biden’s policies are responsible for your own personal financial situation?” 26 percent said “a great deal,” 35 percent said “somewhat,” 24 percent said “not very,” and 14 percent said “not at all.” That adds up to 61 percent who think the president has some influence on their personal financial situation.

 

Unsurprisingly, this adds up to an electorate that is unimpressed with the president. Biden’s job approval came in at 40 percent, which is the lowest it has ever been in the CBS News/YouGov survey. His approval of how he’s handling the economy is at 34 percent, which is tied for the lowest it has been since June 2022.

 

There’s one other wrinkle about the cost of living, covered on the front page of the Wall Street Journal today:

 

Double-digit premium hikes. Higher deductibles. New coverage limits. Drones to check the state of roofs and yards.

 

Home insurers are insuring less and charging more as they try to claw their way back to profitability after losing money in five of the past six years, analysts and insurance agents say.

 

“We’re seeing moves to put more of the risk back onto the homeowner, tougher underwriting restrictions and big rate increases,” said Lauren Menuey, a managing director at independent agency Goosehead Insurance.

 

The higher-cost, lower-coverage trend extends well beyond Florida, California and other states prone to hurricanes, floods or wildfires, Menuey added. “I don’t think anywhere is safe from this right now,” she said.

 

How many Americans’ financial circumstances have taken a hit by some home damage or repair that required a much higher payment than they ever expected, because their insurance company won’t cover as much?

 

I am writing this around 8 a.m. on Monday morning. Take a look at Donald Trump’s Truth Social feed. Take a look at Ron DeSantis’s Twitter feed. (Judging from the latest New York Times poll, these two men are still the only serious contenders for the GOP nomination. I’m not telling you how things ought to be, I’m telling you how things are. The New York Times numbers aren’t that different from the rest of the national polling.)

 

Trump is talking a lot about special counsel “Deranged Jack Smith,” his own poll numbers, the Mar-a-Lago security tapes, and his threat to primary Republicans who refuse to impeach President Biden. (Trump’s favorite issue is always himself.) DeSantis is talking about Biden’s border crisis, Kamala Harris’s inaccurate attack on Florida’s history-education standards, government colluding “with big corporations to censor information from the public,” and “elites who wanted to plunge society into lockdown dystopia.”

 

It will not surprise you that I find one set of issues much more resonant and compelling and likely to appeal to a broad swath of the public than the other.

 

But do you see a lot of discussion of inflation and the economy in either of those feeds from Trump and DeSantis?

 

And if not . . . why not?