No. of Recommendations: 3
The
NYT has done two pieces digging into why voters are still negative on the economy, even though inflation rates have come down. Since we've talked about that here, I thought they would be interesting.
The first points out that although
average wages have increased faster than
average prices, there's
lots of people for whom that isn't true, and perhaps even more people that are still worse off than if pre-pandemic trends had continued:
But this is not a simple case of facts versus “vibes.” Economic statistics are based on broad averages. Dig deeper, and the story becomes more complicated. How a given family or individual has fared over the past five years depends on a litany of factors: whether the earners own their home or rent; whether they had to buy a car or send a child to day care; whether they were able to change jobs or demand a raise.
“I feel like some people are being very dismissive, saying, ‘Oh, people are wrong — there has been all this real wage growth,’ but that is a simple average,” said Stefanie Stantcheva, a Harvard economist who has studied how people experience inflation. “It’s actually very, very hard to say people are wrong — I would almost never say that.”
The bottom line: Most American workers are probably making more money today, adjusted for inflation, than they were in 2019. But not all have seen their pay keep up with their own cost of living, and many — perhaps most — are lagging behind where they would be if prepandemic trends had continued unabated. https://www.nytimes.com/2024/10/28/business/econom...The other piece points out that voters are still annoyed at the higher
level of high prices, and psychologically tend to regard higher prices and higher wages differently:
But they are also annoyed that prices are higher than they were before the pandemic; that levels are up, even if they are no longer rising as quickly.
“It’s not that they’ve lost touch with reality,” said Joanne Hsu, director of consumer surveys at the University of Michigan, explaining that consumers often raised the issue of high price levels during their interviews. “High prices continue to weigh down their personal finances, and that remains very frustrating.”
Wages have climbed faster than prices for many consumers, but that is not true across the board. And people tend to see raises as something that they have earned, whereas they see price increases as something that is being done to them — perhaps even unfairly.https://www.nytimes.com/2024/10/31/business/econom...The latter piece also digs into the fact that voters tend to view the economy through a partisan lens based on who's in the White House.
