Speaking of the economy…
…and the perceptions of it.
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Saturday, November 11, 2023
· 4 comments
I had already opened this article from The Atlantic, “Why Americans Can’t Accept the Good Economic News,” in a tab to finish reading it, and after James Joyner’s piece on food prices it seemed worthless.
The piece states the following.
First, median household net worth has increased.
The increase in average household net worth was the most notable improvement: It rose 37 percent to $192,000 from 2019 to 2022. (All figures are adjusted for inflation.) Americans of all income levels saw significant gains, with the largest gains among people in the middle and upper middle classes, suggesting that there was a slight reduction in wealth inequality during this time. Black and Latino households, in particular, saw their average net worth rise more quickly than white households—although the racial wealth gap is so large that this change narrowed it only slightly.
A key driver of this increase was the rising value of people’s homes – and a higher percentage of Americans owned a home in 2022 than in 2019.
Of course, if most of that is the value of the home, that doesn’t increase your purchasing power. In fact, its primary function in the short term is to increase your property taxes. But the piece establishes that it is more than that.
The financial situation of households also improved in other ways. The amount of money the average household had in bank and retirement accounts increased significantly. The share of Americans who own stocks directly (i.e. not in retirement accounts) rose by more than a third, from about 15 to 21 percent. The share of Americans with retirement accounts rose from 50.5 to 54.3 percent, a notable improvement. And a fifth of Americans said they own a business, the highest share since the survey began in its current form (1989).
Debt burden has improved:
Americans have also reduced their debt burden during the pandemic. The median credit card balance fell by 14 percent and the share of people with auto loans fell. More significantly, Americans’ average debt-to-assets, debt-to-income and debt-payments-to-income ratios have all fallen, meaning that in 2022, U.S. households will, on average, have one had lower debt loads than three years previously.
Income has increased.
The increases in real income (in this case measured from 2018 to 2021) were small – median household income increased by 3 percent, with every income group seeing increases. But that was better than anyone could have expected, considering that period included a pandemic-induced recession and just a single year of recovery.
[…]
For example, hourly wages for production workers and non-managerial workers (who make up about 80 percent of the American workforce) rose 4.4 percent year-over-year in the third quarter of 2023, outpacing inflation. And that wasn’t unusual: Arindrajit Dube, an economist at the University of Massachusetts at Amherst, crunched the numbers and found that real wages for the same sector of workers are not only higher than they were in 2019, but are now about where they would be would have been if we had continued the upward trend before the pandemic.
The piece ends like this.
Even taking into account the high inflation we experienced in 2022, no one could really look at the U.S. economy today and say that the policy decisions of the last three years have made us poorer. But of course that’s exactly what many Americans feel.
While this pessimism doesn’t bode well for Biden’s re-election prospects, the real problem with it is even broader: If voters think that the policies that helped them have actually hurt them, politicians are much less likely to implement similar policies in the election USA will accept future. The US has done a lot right in its macroeconomic approach over the last three years. It’s a shame that voters think so much has gone wrong.
As the article states: We as a country are in much better shape than we had any right to expect following the pandemic. But of course people don’t judge their personal feelings about the economy based on macroeconomic indicators. Ultimately, the reality remains, as does James’ ongoing thesis, that people pay much more attention to food and especially gasoline prices when assessing their views on the economy.
For the same reason, I paid $2.75 a gallon for gas at Costco on Thursday (and I noticed the Walmart price was $2.79), but I’m betting that’s the state of Alabama won’t turn in Biden’s direction or even shake people’s general feeling that the country is doing poorly economically. Conversely, beef prices remain significantly higher than they were a few years ago. Luckily, I’m at the point in my life where I look at the price, write it down and still buy what I want, but the fact that the price is higher is still pretty gross.
FWIW, here is the gas price history over the last 18 months via GasBuddy.
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