Voters see a bad economy, even if they are doing well

The fastest inflation in four decades has Americans feeling austere about the economy, even as their own finances have so far held up re...

The fastest inflation in four decades has Americans feeling austere about the economy, even as their own finances have so far held up relatively well.

Just 10% of registered voters say the U.S. economy is “good” or “great,” according to a New York Times/Siena College poll — a remarkable degree of pessimism at a time when wages are rising and the the unemployment rate is near its lowest level in 50 years. But the rapidly rising cost of food, gasoline and other necessities is nullifying wage increases and eroding living standards.

Americans’ bleak outlook is bad news for President Biden and congressional Democrats heading into this fall’s midterm elections, given that 78% of voters say inflation will be “extremely high” when they will go to the polls.

It could also be bad news for the economy. A long-lasting index consumer sentiment hit a record high in June, and other surveys also show that Americans are becoming increasingly nervous both about their own finances and about the economy in general.

Economists have long studied the role of consumer sentiment, which can be influenced by the media stories and indicators that are not representative of the broader economy, such as some grocery prices or shortages of particular goods. At least in theoryeconomic pessimism can become self-fulfilling as consumers cut spending, leading to layoffs and ultimately recession.

Christina Simmons grew up in poverty and worked hard to give her 7-year-old son a better life. She rose through the ranks of the health insurer where she works near Jacksonville, Florida, and has more than doubled her salary in recent years. However, she feels like she is falling behind.

“I’ve worked hard to get where I am so I can take a vacation with my son,” she said. “We were going away for the weekend and getting a hotel room in another state, and going for a hike and seeing a waterfall and ordering pizza from a hotel room and stuff. And I can’t do this anymore.

Ms Simmons, 30, is still able to make ends meet, in part because she is able to save money on gas by working remotely. But she worries about what might happen if the economy slows and puts her job at risk – one consequence of her promotion, she said, is that she is further removed from clients, which makes her more vulnerable to layoffs. She gave up modest luxuries, like a gym membership and nights out with friends, to build up her savings.

“I’m saving money just in case it gets worse,” she said. “I’m stricter than necessary because I don’t know how it’s going to be.”

Decisions like Ms Simmons’, multiplied in millions of homes, could help bring about the very recession she fears.

They could also have political consequences. Ms. Simmons voted for Donald J. Trump for president in 2016 and then for Mr. Biden in 2020. But she plans to return to Republican support in the November congressional elections, largely because of the rising cost of life. She doesn’t know what Mr. Biden’s responsibility for inflation is, she said, but she does know that he has failed to fix it.

Mr. Biden and his advisers have argued that while inflation is a serious problem, the economy is strong in other ways. They point to the strength of the labor market, the record rebound in economic output, and wage growth that has been fastest for low-wage workers. But those arguments failed to appease voters.

Even among Democrats, only 20% of voters said the economy was good or great; among independents, whom some Democrats must woo if they hope to retain control of Congress, that figure is only 8%. (Only 4% of Republicans say the economy is doing well.)

But while voters are pessimistic about the overall economy, many say their own finances are still holding up relatively well. Forty-three percent of voters in the Times/Siena poll said their personal financial situation was good or excellent. Even among those who said the national economy was “bad,” a third of voters said they were personally doing well.

Jamie O’Regan earns a six-figure salary as the director of alumni relations at a private school in Brooklyn and lives in a Jersey City apartment with a rooftop pool.

But Ms O’Regan, 38, is feeling the pinch of higher prices. Effective July 1, her landlord increased her rent by $500, to $2,900 a month. She got rid of her car, which was costing her $600 a month between parking, insurance and loan repayment. Able to work from home during the summer, she saved $100 a week by not commuting. She would like to buy a house, but sees no way to do so and is now considering taking on a roommate.

“If I feel like I’m living paycheck to paycheck, how does the average person work?” said Mrs. O’Regan. “It seems no one feels safe from this.”

Economists say weak consumer sentiment is unlikely to turn an otherwise healthy economy into a sick one. But it could amplify or prolong an already bad situation. In marginal cases, an official declaration of a recession – and the resulting media attention – can create significantly poorer results than weak economies narrowly escaping recession.

The relatively brief recession of 1990 and 1991, for example, had no obvious cause such as an asset bubble. For this reason, the researchers speculated that it may have been fueled by a national bad mood brought on by the Gulf War, an oil price shock and rising interest rates.

Yet the link between consumer perceptions and economic outcomes is not straightforward. Sentiment fell sharply following the terrorist attacks of September 11, 2001, for example, but real spending rebounded quickly, perhaps due to a rally effect around the flag that helped support the economy quickly. after the dot-com collapse.

Unlike 2001, however, the Federal Reserve is actively trying to slow the economy, which means Americans have good reason to be cautious. Wages are not keeping up with rising prices, the housing market has already started to calm down and consumer spending, adjusted for inflation, fell in May. Credit card balances are rising and delinquency rates are rising, signs that some households are already struggling to pay their bills.

The Times/Siena poll found that top earners were worried about the economy, but mostly felt confident about their own finances. Among low-income people and those without a college degree, however, the hard times are already here. More than 80% of voters earning less than $50,000 said their personal financial situation was “poor” or “just fair,” compared to about 30% of those earning more than $100,000.

High gas prices eat away at the money Anna Walker earns as a driver for DoorDash in Southern California. At the same time, she’s noticed that customers are tipping less, which she attributes to stress on their own budgets.

“We go out and eat something, and we’re like, ‘Wait a minute, wasn’t that a dollar cheaper a few days ago? “, She said. “I have to keep making more and more money.

During the school year, Ms Walker, 50, drove from the time she dropped her 11-year-old daughter off at school until 7 or 8 p.m. Now, with school out for the summer, her daughter is coming with her – Mrs. Walker can’t afford to send her to camp.

For now, Ms Walker said, she can make it work. But she is one crisis away from disaster.

“I feel like I’m okay as long as I’m working,” she said. “But I know the minute my car breaks down, I’ll be homeless.”

Ms Walker voted for Mr Biden in 2020 and considers herself a Democrat. But she said Washington’s failure to help struggling families like hers left her disillusioned and she no longer plans to vote in November.

“I don’t care if the House has more Republicans, has more Democrats,” she said. “I don’t think these people care about us at all, to be honest with you.”

The Times/Siena survey of 849 registered voters nationwide was conducted by telephone using live operators July 5-7. The margin of sampling error is plus or minus 4.1 percentage points. Crosstabs and methodology are available here.

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Newsrust - US Top News: Voters see a bad economy, even if they are doing well
Voters see a bad economy, even if they are doing well
Newsrust - US Top News
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