If you listen to Americans now, you will think that when it comes to the economy, Joe Biden is the worst American president since Herbert Hoover. Each new poll seems worse than the last, and according to poll analysis website FiveThirtyEight, Biden has the lowest approval rating of any post-war president at this point in his presidency. Fewer than one in seven Americans believe the country is on the right track, and most who believe it is on the wrong track seem to blame Biden.
Of course, we all know the main reason for this: inflation. Americans hate high prices and especially high gas prices. With inflation at 9 percent and gas prices around $4.50 a gallon, even after a recent drop, it was inevitable that Biden’s popularity would take a major hit. But a recent poll from CNBC, its latest All-America Economic Survey, suggests the president’s troubles run deeper. The poll showed, of course, that Americans were angry about inflation and Biden’s failure or inability to do anything about it. But it also included this confusing result: People for whom jobs were the top concern said they favored Republican control of Congress by a margin of 54 to 31. And that was a wider margin for the GOP than for those for whom the cost of living was the biggest concern.
That poll aligns with an astonishing survey released by the Global Strategy Group back in February that found 37 percent of respondents thought the US economy lost jobs in 2021, a year that added a historic 6.6 million jobs became; only 28 percent thought it had gained jobs. (The rest either didn’t know or thought the number of jobs hadn’t changed.)
“Help Wanted” signs are everywhere. Though fewer people are in the labor force than before the pandemic, the unemployment rate is 3.6 percent — essentially where it was in 2019, its lowest level in decades — and the economy has added more than 9 million jobs since Biden took office , partly because of the $1.8 trillion stimulus package Democrats passed in early 2021. However, Biden and Congressional Democrats are getting little-than-no credit for the buoyant job market.
Given how low unemployment is and how high inflation is, you could normally think of this as a “best of times, worst of times” scenario. But Americans say it’s just the worst ever.
Some of this appears to be related to what The Atlantic’s Derek Thompson recently dubbed the “everything-is-strange economy.” But a few other things are going on that help explain how Americans feel about the job market. The first is the argument that the 2021 stimulus was oddly too successful – it helped the labor market rebound so much that it made itself seem redundant. This is similar to what is sometimes referred to as the “paradox of preparedness” in crisis planning: actions taken to prevent or mitigate a crisis will end up appearing unnecessary if successful.
You can see this today in comments suggesting the employment recovery was inevitable and solely a function of the end of the pandemic. But it wasn’t. If you go back to 2020, most projections for the jobs recovery have been bleak; Many economists expected the kind of slow, faltering recovery that we saw after the Great Recession. A National Association for Business Economics survey of 45 economists released in April 2020 predicted that the unemployment rate would still be 6 percent by the end of 2021. And JP Morgan Asset Management’s chief investment officer suggested getting the ratio down to 3.5 percent could take a decade.
In reality, the unemployment rate at the end of 2021 was around 4 percent; it took just two years to get to 3.6 percent. Although part of that drop was the result of Operation Warp Speed, which got us vaccines sooner than most expected, the job recovery owes much to the Federal Reserve’s easy-money policies and the Democrats’ 2021 stimulus plan . But in the process, oddly enough, all those dire predictions were forgotten, and the public now associates the stimulus plan almost exclusively with high inflation, not low unemployment.
Additionally, as of 2020, something very strange was happening to Americans’ perception of the economy.
Historically, the unemployment rate has played a large role in how people see how the economy is faring, and in fact shaped their own well-being: understandably, when unemployment is low, people are much better off than when unemployment is high. (The inflation rate had a similar effect.) But a new paper by Darren Grant, an economist at Sam Houston State University, shows that since the pandemic began, that relationship has essentially disappeared and Americans’ views of the economy have grown strong decoupled from the unemployment rate.
It’s easy to see why this happened in 2020: Even as the unemployment rate soared, people viewed the economy more positively than usual as stimulus checks and additional unemployment benefits cushioned the effects of the downturn. But what’s interesting — and confusing — is that this disconnect continues while the job market recovers. Even accounting for inflation, the sharp drop in the unemployment rate hasn’t had much of an impact on people’s overall view of the economy.
The relationship between inflation and people’s perception of the economy has remained pretty much the same over the last 50 years. The relationship between unemployment and people’s perceptions has changed completely. The Biden administration has talked about jobs every chance it got, and the evidence of tight labor markets is everywhere. But few seem to care.
Some of this is a side effect of people’s anger at inflation. Some of this is likely a product of the fact that COVID just won’t go away. And some of this, as others have argued, has to do with the media’s relentless focus on inflation (although the media’s more interest in inflation than unemployment is nothing new).
Regardless, the key point is that Americans view the job market as irrelevant alongside inflation and gas prices. If the economy goes into recession and unemployment starts to rise again, who knows if this will remain the case? But what seems clear is that Democrats can trumpet the low unemployment rate all they want until inflation falls and stays low. Americans just won’t listen.
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