With the 2024 election campaign already gathering steam, many pundits are obsessed with explaining the disparity between the strong economic performance and Americans' stark disapproval of the way President Joe Biden has handled it.
The latest temperature check on consumer sentiment from the University of Michigan Consumer Surveys found that the outlook, while low, is steadily improving, reaching its highest level since July 2021. Meanwhile, the United States added 216,000 jobs in December and kept the unemployment rate below 4% for the 23rd straight month – the longest streak in over 50 years.
These consumer surveys illustrate a simple truth: Americans don't pay much attention to the macroeconomic data that experts rely on to evaluate the economy, as well as technical data like labor force participation rates, unemployment rates and gross domestic product. Can you blame them?
What Americans pay attention to and understand in sophisticated ways is their own lives and those of their families and friends. And for this purpose, purchasing power matters. Falling inflation does not necessarily mean an immediate and equivalent fall in the price of essential goods such as milk or fruit and vegetables; it simply means that additional price increases will be smaller or non-existent. But consumers still have the right to frown at paying $4 for a gallon of milk.
Preoccupation with matching economic indicators with economic sentiment risks missing the larger point: Last year, American workers took matters into their own hands.
Across a surprisingly wide range of industries, workers went on strike or threatened to strike to combat the fraud of being paid pennies for “essential” work during a global pandemic while their CEOs received double-digit raises. Thanks to their efforts, these workers achieved remarkable gains, including pay increases well above inflation, in contracts designed to improve lives – including for UPS drivers, kitchen workers and pilots at United, Delta and American Airlines. American workers finally began to narrow the vast wealth and income disparities that have become a hallmark of our economy.
But what makes these gains politically important ahead of this year's elections? After all, today only 6% of private sector workers have joined unions, lagging behind all other major industrialized nations. How important is that?
This is important because union workers' successes benefit more than just them. Most employees have family members who will directly benefit from the new jingle in their pocket. More importantly, non-union companies are becoming frightened and responding to significant increases in union membership in their industry by giving their own raises, both to discourage their workers from unionizing and to avoid losing workers to unionized competitors.
Perhaps the greatest example of this is the United Auto Workers' simultaneous strikes at each of the three major automakers (Ford, GM and Stellantis), for the first time in UAW history. The result? Big wins for UAW members and non-union workers. Just weeks after the union's tentative agreements, Toyota, Honda and Hyundai plants announced pay increases for U.S. workers. Tesla did the same in early January after the union announced efforts to organize one of the company's plants.
Another important factor to consider when trying to assess the personal economic prospects of American workers is the historic investments in infrastructure and clean energy that we initiated in the 117th Congress – through the Infrastructure Investment and Jobs Act CHIPS and Science Act and the Inflation Reduction Act – are just beginning to take effect. Although many projects have been given the green light, groundbreaking has only recently taken place. That means lots of good union jobs are being created every month in construction and manufacturing and their spillover effects.
In this regard, Americans' feelings about the economy reflect their personal experiences, rather than a collection of impersonal macroeconomic data points. In 2024, many workers will find a new spring in their step thanks to their negotiating skills and the ripples that collective action is unleashing on the labor market. These developments are a major contributor to the major turnaround in recent consumer confidence numbers.
Workers are looking forward to larger paychecks in their bank accounts, continued rollout of new infrastructure and clean energy projects, continued low unemployment and continued cooling inflation. The economy that President Biden has presided over will certainly make American voters feel good.
Andy Levin is a senior fellow at the Center for American Progress (americanprogress.org), a liberal public policy research and advocacy organization based in Washington, DC. A Democrat from Michigan, Levin served in the U.S. House of Representatives from 2019 to 2023.
Andy Levin
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