There’s a story about two old friends who run into each other on the street. The first one says “I’m in such a hurry…quickly, in a word, how are you?” The second replies “good.” The first says “ok I’ve got just a bit more time than that, how about in two words, how are you?” The second ponders for a moment, and then replies “not good.”
It’s a reminder that there’s often a sea of nuance beneath a headline, and that thinking about that deeper story can lead to very different conclusions. Which is probably what nervous Democrats and exultant Republicans should keep in mind when it comes to the politics of the seemingly blistering economy.
The big three economic figures most often cited in the news are unemployment, GDP growth, and the stock market. All seem to be going gangbusters. In April, the economy added a robust 263,000 jobs while unemployment fell to a scant 3.6% (the lowest in 50 years as breathless reporters and shouting White House operatives will tell you). GDP grew at a very healthy 3.2% rate. And the stock market hit a new high, with the S&P 500 rising an eye-popping 37% during Trump’s term (note: Presidents Reagan, Clinton, and Obama actually oversaw bigger growth).
So that sure sounds, in a word, “good.” The overall economy is strong. Americans feel pretty darn happy about it, and think Trump deserves credit. Job growth has actually been strongest in Trump-voting counties, suggesting an extra political boost there. The President is bursting with even more than his usual self-congratulation on Twitter. And why not? Prediction models suggest that these kinds of economic numbers lead to re-electing Presidents by a landslide.
Should Democrats give up? Change the subject back to impeachment? Get on board with the trade war? Lean into some potential schadenfreude and hope for a crash?
That’s where the sea of nuance comes in.
First of all, for Democrats wondering how in the heck Donald Trump managed to preside over such gaudy growth despite his general economic bumbling and basic misunderstanding of what a tariff is, it’s actually not all that hard to figure out. The economy was already growing at 2.2% and steadily creating jobs both during and in the immediate aftermath of the Obama presidency. And then it got a massive, stimulative injection of tax cuts and government spending equaling hundreds of billions of dollars in 2018 and 2019. So, Republicans took a fire that was burning strong and bright and added gasoline…not too shocking that it started to heat up even more. Though bear in mind that the jury is still out (to say the least) as to whether these measures will lead to any long term growth or just burn through our fuel and leave us with ashes.
More important, it’s not the top-line economic figures themselves that matter in politics (or in economics), it’s how people feel about them. And there, the story is a lot more “not good.” For one thing, people are experiencing a much greater sense of economic insecurity than they used to. That’s why Democratic messages on protecting people’s health coverage resonated so strongly in the last election. Americans’economic lives don’t boil down to “do I have a job or not.” As people in the middle class have been squeezed by slow-rising (or shrinking) incomes and fast-rising costs for child care, health care, housing, and education (see chart below from Center for American Progress), they increasingly feel like they’re not even treading water, but actually being washed downstream, even if they have a job.
The sense of deep insecurity is also fed by the fact that much of the working population has experienced fresh pain in the last 12 years. They understand the cyclicality of the economy, especially in those Republican-leaning rural counties where they’ve this movie before: the tail end of an economic expansion brings brief upticks in local industries, before another, deeper decline.
That’s why when you dig beneath the initial question about the economy in polls (generally about 2/3 say something positive right now), you unearth much more complex feelings. Quinnipiac University found that 60% of Americans don’t think the big economic statistics they see in the news accurately reflect the reality of the economy for average Americans. In fact, as CNN showed, “Americans don't believe that Trump cares about the average American.” And the Washington Post Poll found that 80% of Democrats and 60% of Independents think that the economy mainly benefits people already in power.
So what’s really going on here is that Americans may grant that the economy is doing well, but they think it’s mostly other people who are benefiting (hint: they’re right). And that is key. The Nobel-prize winning insight of psychologists Daniel Kahneman and Amos Tversky (one that spawned the entire field of behavioral economics) is that people’s decisions and perceptions are often driven not by dispassionate analysis but by concepts of fairness or fear of losing something they have, even if those perceptions don’t seem altogether “rational.” It has been shown repeatedly that people will give up a benefit to themselves if feel like someone else might be getting more.
In other words, when it comes to the economy, FOMO is real. It’s not whether you’re doing ok. It’s whether people who are already well off are doing better. It’s not “are you better off than you were four years ago?” It’s who’s already better off and getting even further ahead?
Smart Democratic strategists have figured out how to leverage these realities. Leading Democratic pollster Global Strategy group has shown that voters agree 57% to 43% with the argument that “we need to ensure the economy works for everyone, because right now it’s just wealthy people at the top getting richer, while people who work for a living are falling further behind” over the argument “right now the economy is generally working just fine: the national economy is booming and unemployment is at its lowest point in nearly two decades.”
And cagier Republicans may already sense a trap in the “economy is booming” pitch. They likely remember the fate of the Democrats who had to run on the Obama stimulus and recovery in 2010. The facts showed that the economy had been saved from another Great Depression and was on an upswing. But voters didn’t feel that way. Which left democrats in the awful, and losing, position of telling voters who you gonna believe, me, or your lying eyes? That didn’t go well.
The bottom line is that at first glance, the President seems to feel like he can play offense on the economy (and probably daydreams about Democrats meekly having to resign themselves to a grudging acknowledgement of a Trump achievement). On closer inspection, it is Republicans who would be politically wise to temper any economic boasting with a real acknowledgement of legitimate middle class anxiety, and ideas for how to help. We all root for America to succeed: growth is good, and more jobs are reason to celebrate. That’s not the issue. But Democrats should be (and are) taking the initiative by getting to the actual issue that is on voters’ minds: how to make economic success in the news mean more economic security for them.