Have you heard that a huge wave of organized shoplifting – coordinated thefts by groups that are effectively looting stores – is rampant in the United States? You probably have. A few years ago, Walgreens said organized shoplifting was the reason it decided to close several locations in San Francisco. In April, the National Retail Federation released a dire report claiming that “organized retail crime” was responsible for nearly half of the store goods that went missing in 2021. The alleged shoplifting tsunami was relentlessly hyped by both the usual suspects, such as Fox News, and some politicians.
But it never happened.
I suspect that most readers have not noticed that the retail association recently withdrew its demands from April. Even fewer people probably noticed when The San Francisco Chronicle examined the police files and found that they didn't support Walgreens' claims; “Maybe we cried too much,” the company’s chief financial officer told investors earlier this year.
Shoplifting data is vague and depends heavily on retailers' own reports. Was there really an increase in New York City while shoplifting was decreasing in the rest of the country? Perhaps. What is clear is that the narrative of thieving mobs sweeping through America's stores was not a reflection of reality; It was basically conjured up from some dubious data and a handful of videos.
Regular readers will have guessed that I will draw some parallels with economic perception. In fact, the parallels are striking, although the gap between public perception and data when it comes to crime goes back much further.
In terms of crime, the gap began to widen in the early 1990s. For reasons that are still debated, violent crime in America fell precipitously from about 1990 to about 2015, yet many Americans consistently told pollsters that crime was increasing.
Did people accurately report their experiences, no matter what the data may have said? There is strong evidence to the contrary. On the one hand, people assessed the development of crime in their own areas – which they were able to observe first hand – significantly more positively than that of the country as a whole. Furthermore, the era of falling crime corresponds quite closely with increasing gentrification, the return of wealthy Americans to inner cities, which appears to be linked to the perception of lower crime. Whatever they told pollsters, Americans who voted with their feet—that is, their floats—said that cities were becoming safer.
In short, Americans seem to have felt relatively safe themselves, but believed that bad things were happening to other people elsewhere.
Now, 2020-21 saw a rise in violent crime, particularly homicide, which is believed to be linked to the social disruption caused by the Covid pandemic. Data for 2022 and partial data for 2023 suggest that this increase is now easing. But are Americans really feeling this improvement? Again, look at what people do, not what they say. Pedestrian traffic in large city centers has declined sharply since the pandemic – but only on weekdays, when many people are still working from home. Traffic on the weekends, when people head downtown for entertainment, shopping, etc., has more or less fully recovered, something we wouldn't see if people were afraid to visit criminal urban hellscapes.
All of this sounds very familiar to anyone who pays attention to economic sentiment. In recent years, Americans have been extremely negative about the national economy, but even less so about their local economy. And everything we know about what Americans are doing, contrary to what they tell pollsters, suggests that on average they feel pretty good about their own situation: consumer spending is up, new business creation is up is high and so on.
Another point about watching what people do, not what they say: Moody's, the ratings agency, looked at business surveys like those from the National Federation of Independent Business. As Moody's notes, these surveys include both “hard” indicators, such as hiring and investment plans, as well as softer questions, such as what people say they think about the business outlook. In fact, the hard indicators—those that tell us what companies are actually doing—are consistent with a strong economy, while the soft indicators are what one would expect in the midst of a severe recession.
It's probably worth noting that the NFIB is very Republican. OpenSecrets reports that GOP candidates have received over 99 percent of their donations so far this election cycle.
Journalists often shy away from acknowledging that public opinion about the economy is at odds with reality, lest they be labeled elitists who cite fancy government statistics instead of listening to real people. And I keep seeing almost desperate attempts to find bad news in the economic data.
However, the fundamental puzzle is not that people are dissatisfied despite favorable macroeconomic indicators. It's that Americans say things are terrible but act like they're doing just fine. And I tend to at least put more weight on what people do than what they say.
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