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    Will Americans Even Notice an Improving Economy?

    Imagine that your picture of the U.S. economy came entirely from headlines and cable news chyrons. Would you know that real gross domestic product has risen 6.7 percent under President Biden, that America gained 4.5 million jobs in 2022 and that inflation over the past six months, which was indeed very high last winter, was less than 2 percent at an annual rate?This isn’t a hypothetical question. Most people don’t read long-form, data-driven essays on the economic outlook. Their sense of the economy is more likely to be shaped by snippets they read or hear.And there is a yawning gulf between public perceptions and economic reality. Recent economic data has been positive all around. Yet a plurality of adults believes that we’re in a recession. In an AP-NORC survey, three-quarters of Americans described the economy as “poor,” with only 25 percent saying it was “good.”You might be tempted to say, never mind the data, people know what’s happening to the economy from personal experience. But there’s a big disconnect on that front, too.Even with 75 percent of the public saying the economy is poor, a majority of Americans rate their own financial situation positively. On average, people seem to be saying that they’re doing reasonably well but that very bad things are happening to somebody else.This “I’m OK, you aren’t” syndrome was especially clear in a Federal Reserve survey carried out in late 2021; we won’t have the 2022 results until later this year, but I expect them to look similar. According to the 2021 survey, 78 percent of households said they were doing “at least OK” financially, a record high; only 24 percent said the national economy was “good or excellent,” a record low. Assessments of local economies, for which people have some personal knowledge, were in between.Now, this isn’t the first time I’ve written about the disconnect between economic perceptions and reality. In the past, however, I got a lot of pushback from people insisting that the public was in deep shock over the resurgence of inflation after years of more or less stable prices.At this point, however, that’s becoming a harder position to sustain. Since last summer prices of some goods, notably of eggs, have soared, but other prices, notably of gasoline, have plunged. As I said, the overall inflation rate in the second half of 2022 was around 2 percent, which has been normal for the past few decades, while the unemployment rate in December, at 3.5 percent, was at a 50-year low. Oh, and inflation-adjusted wages, which fell in the face of supply-chain problems and the Ukraine shock, have been rising again.So what explains the public’s sour view of what is objectively a pretty good economy?Partisanship is clearly part of the story. One striking aspect of that AP-NORC survey was that Democrats and Republicans weren’t that different in their assessments of their personal financial situation; majorities of both groups rated their condition as good. But 90 percent of Republicans said the national economy was poor. A longer view, from the Michigan Survey of Consumers, finds Republicans rating the current economy worse than they did in June 1980, when unemployment was above 7 percent and inflation was 14 percent.What about media coverage? Some of my colleagues get upset about any suggestion that economic reporting has had a negativity bias that affects public perceptions. Yet there’s actually hard evidence to that effect. The Michigan Survey asks respondents about what news they’ve heard about specific business conditions; all though 2022 — as the economy added 4.5 million jobs — more people reported hearing negative than positive news about employment.All of which raises an obviously important political question: Will Americans even notice an improving economy?To be fair, we don’t know whether the economic news will stay this good. Although many forecasters have backed off predictions of imminent recession, experts I talk to consider a growth hiccup over the next quarter or two to be likely. There’s also a raging debate among economists over whether we’ll need a sharp rise in unemployment to keep inflation low.But let’s assume that we get past any near-term wobbles and enter 2024 with both unemployment and inflation low. How many Americans will hear the good news?At this point we have to assume that as long as a Democrat sits in the White House, Fox News and Republicans in general will describe the economy as a disaster area whatever the reality. What’s less clear is how mainstream media will cover the economy, and what voters in general will perceive.Reports say that Biden’s political team plans to “lean into the economy” for the 2024 election. Indeed, while nothing is certain in economics (or life), Biden will most likely be able to run on a record of solid growth in incomes and jobs, with the inflation surge of 2021-22 receding in the rearview mirror.But we can safely predict that many people, not all of them Republican partisans, will insist, no matter what, that his record was a disaster. And I, at least, have no idea what voters will end up believing.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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    Brazil’s President Lula Has No Easy Choices

    Brazil’s new president is hemmed in by protesters on one side and financial markets on the other. He needs to spend money to please the public, but he needs to demonstrate fiscal responsibility to keep investors from abandoning Brazilian assets, which could cause interest rates to soar and cripple the economy. Unfortunately, it will be extremely difficult to do both at once.It’s a tough spot for President Luiz Inácio Lula da Silva, the leftist who served two terms from 2003 to 2010 and narrowly won election to a third term in October over the far-right incumbent, Jair Bolsonaro. On Sunday, thousands of Bolsonaro supporters broke into government buildings in the capital, Brasília, to protest what they falsely believe was a stolen election.Lula, as he is known, was able to spend generously on social programs during his first period in office in part because of high prices for many of the commodities that Brazil exports. Brazil is a major producer of steel as well as agricultural products such as citrus and soybeans. Now commodity prices are faltering because of expectations of a global economic downturn. On top of that, Brazil’s central bank has raised its key lending rate to nearly 14 percent in an effort to extinguish inflation, which is running around 6 percent.Bolsonaro, although far right in his politics, governed as a free-spending populist. His government bolstered fuel subsidies last year, which won him votes but worsened the government’s financial situation.Lula, who was inaugurated on Jan. 1 in the company of his adopted pet dog, Resistência, has handed the vital job of finance minister to Fernando Haddad, a fellow leftist who hasn’t (at least yet) won the confidence of investors.With Bolsonaro’s supporters roiling Brasília and other cities, “The capital flow of foreign buyers that entered the Brazilian market recently is likely to be undone,” Matthew Ryan, the head of market strategy at Ebury, a financial services firm, wrote in a note on Monday.In a warning to investors, Filippos Papasavvas, a markets economist at Capital Economics, wrote in a client note on Monday that “any worries about widespread protests could see Lula double down on the more popularist (and less market-friendly) parts of his agenda, such as significant increases to social spending.”For a closer look at Lula’s dilemma, I interviewed Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. A native of Brazil, she was named an honored economist by the Order of Brazilian Economists in 2014 for her contributions to the Brazilian policy debate.“He has no room to do the kinds of things that people expected him to do,” de Bolle told me. On the spending side, investors who worry about deficts spending will rebel if the government increases social spending or puts through a big increase in the minimum wage. Conversely, the public will rebel if he attempts to roll back subsidies on fuel that Bolsonaro put in place.De Bolle said that Brazil’s Wall Street is thick with Bolsonaro supporters. She argued that they gave Bolsonaro the benefit of the doubt but aren’t cutting Lula any slack. I told her that sounded like a great opportunity for investors from outside Brazil: If indeed domestic investors are overly pessimistic about Lula’s ability to rein in spending, then prices of Brazilian debt must be too low, presenting a good deal for buyers. She agreed. “Brazil will certainly present that opportunity,” she said.Then again, if Ebury’s Ryan is correct, foreign investors will be reluctant to scoop up Brazilian assets as long as the political situation remains uncertain. There’s no second honeymoon for Lula.Outlook: Georges Ugeux“Why is nobody talking about the debt?” Georges Ugeux, the chairman and chief executive of Galileo Global Advisors, a New York-based company that advises on mergers, acquisitions and management, asked in an article posted on Medium on Thursday. Rising interest rates have increased the burden of debt. It isn’t just a problem for emerging markets, he wrote. “The over-indebtedness of the United States, Europe, Japan and China could create a much more severe debt crisis, both at sovereign and at corporate levels.” He predicted that 2023 will be “the year where we will start paying the cost of our inconsiderate addiction to debt.”Quote of the Day“Japan’s experience of prolonged deflation suggests that it takes a great deal of effort to dispel anxiety over deflation. Nevertheless, there was no need to give up the challenge of overcoming deflation simply because the economy fell into deflation; against the background of the Bank’s monetary policy measures adopted since 2013, the economy has improved and is currently no longer in deflation.”— Masazumi Wakatabe, deputy governor of the Bank of Japan, in his keynote speech at the annual meeting of the Japan Association of Business Cycle Studies, Dec. 3, 2022Have feedback? Send a note to coy-newsletter@nytimes.com. More

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    4 Takeaways From the Elections

    Doug Mills/The New York TimesKevin McCarthy, the Republican House leader, announced a run for speaker as his party edged toward a majority. Republicans wrested seats from Democrats in New York, Florida, Virginia and elsewhere, while Democrats flipped districts in Michigan and Ohio. Whichever party claims a majority, it will be narrow. More

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    Joe Biden and the Parable of the Raisin Bran

    A remark in a local television interview undercut the president’s message: that his administration was tackling rising prices for gasoline and groceries.It escaped the notice of most in the national political press.But a stray comment President Biden made in a local television interview last week spoke volumes about Democrats’ struggle to find a winning message on inflation.“By the way,” Biden began, “the food prices — the main driver of food prices — is not the price of beef and eggs, etc., although they’re up. It’s packaged goods, packaged goods.”Then the gaffe: “You’re going to see people not buying Kellogg’s Raisin Bran. You’re going to see them buying other raisin bran, which is going to be a dollar cheaper.”Needless to say, eat generic raisin bran is not exactly a poll-tested, winning message. Clips of that comment went viral on the right, racking up tens of thousands of views on conservative YouTube and TikTok channels.Perhaps the president was reading the business section of The New York Times, which reported this week on how food companies are banking huge profits. Or perhaps he was just falling into the politician’s trap of playing pundit, which is rarely a good idea.Either way, Biden’s remark undercut what he had just claimed seconds earlier — that his administration was succeeding in tackling rising prices for gasoline and groceries.“We’re getting them down,” he said. “I told you I’d bring them down. We’re bringing it down.”True for gas, less so for groceries. On Wednesday, the Federal Reserve cranked up interest rates another notch, indicating that the people who can shape the U.S. economy don’t believe they have licked the inflation problem.More to the point, Biden’s raisin bran comment unintentionally revealed just how inconsistent the Democratic Party’s message on inflation has come across to voters.Some of it has been bad luck — above all, the fact that Biden took office during a pandemic that scrambled global supply chains, driving up costs that businesses then duly passed along to consumers. “We’re not as bad as Turkey” is a hard case to make at the polls.There were also costly communications mistakes along the way. Last spring, administration economists were insisting that inflation would be “transitory.” That assessment proved to be wildly optimistic, and Republicans have not let voters forget it.The State of the 2022 Midterm ElectionsElection Day is Tuesday, Nov. 8.Biden’s Speech: In a prime-time address, President Biden denounced Republicans who deny the legitimacy of elections, warning that the country’s democratic traditions are on the line.State Supreme Court Races: The traditionally overlooked contests have emerged this year as crucial battlefields in the struggle over the course of American democracy.Democrats’ Mounting Anxiety: Top Democratic officials are openly second-guessing their party’s pitch and tactics, saying Democrats have failed to unite around one central message.Social Security and Medicare: Republicans, eyeing a midterms victory, are floating changes to the safety net programs. Democrats have seized on the proposals to galvanize voters.When the war in Ukraine drove a fresh jump in prices, Democrats deployed the phrase “Putin’s price hike” to try to mitigate the damage. There were also scattershot attempts at whacking Corporate America for “price-gouging” — meatpackers and oil companies being among the main villains — although some liberal economists questioned the logic.In remarks on inflation in May, Biden tried out a new phrase: “the ultra-MAGA agenda,” referring to a plan by Senator Rick Scott of Florida that would require Congress to reauthorize spending for Social Security and Medicare. Republicans, including Scott, have distanced themselves from the idea.Finally, with the Inflation Reduction Act’s passage in August, Democrats had accomplishments that they could credibly argue would address rising costs for families. The legislation included price caps for insulin and provisions allowing Medicare to negotiate the price of prescription drugs, for instance. In isolation, those policies were overwhelmingly popular, polls showed.But that sentiment may have been an illusion: Polls also indicated that only a third of voters had heard of the new law and that the majority did not believe it would reduce inflation.Biden has spoken about the economy in speeches far more often than any other subject; he has made 22 appearances since August for midterm-related events, according my count. Even so, progressives complain that Democratic candidates neither put significant resources or energy into promoting those achievements, nor do they adequately punish Republicans for their own positions.Democrats felt crippled, too, by the president’s poll numbers: Few candidates were eager to stand shoulder-to-shoulder with a leader whose approval rating went negative in August 2021 and has hovered around the low 40s ever since.In a prime-time speech on Thursday, Biden made his closing pitch to voters, arguing about the threat Republicans posed to democracy — not about what he had done to address inflation. Even though he spoke about the economy earlier in the day, his democracy speech led the news.‘Hot dog, the Biden economic plan is working’Republicans, meanwhile, had a much simpler task in this election: blame Democrats for everything.In one telling episode recounted by Republican strategists, the National Republican Congressional Committee ran a small series of digital ads during the Fourth of July congressional recess in 2021 highlighting the cost of food. They resonated strongly with voters, even in focus groups run by Democrats.At the time, however, Democrats were still trying to convince the public that prices were not, in fact, rising.“Planning a cookout this year?” the White House said on Twitter. “Ketchup on the news. According to the Farm Bureau, the cost of a 4th of July BBQ is down from last year. It’s a fact you must-hear(d). Hot dog, the Biden economic plan is working. And that’s something we can all relish.”A graphic accompanying the tweet read: “The cost of a 4th of July cookout in 2021 is down $0.16 from last year.” In response, Representative Burgess Owens, a Republican of Utah, said on Twitter that the Biden administration was “bragging about saving us $0.04 on sliced cheese.”At the time, the Consumer Price Index had risen 5 percent between May 2020 and May 2021; the most recent numbers indicate that the index has climbed by 8.2 percent in the 12 months through September.Representative Tom Emmer of Minnesota, a former lawyer and the chairman of the Republicans’ House campaign arm, said in an interview that he was bringing his courtroom experience to the task of winning back the seats his party lost in 2018. He advised G.O.P. candidates to make Biden’s handling of inflation their top line of attack.“It’s something I learned when I was trying cases in front of juries,” Emmer said. “You figure out what the theme of the case is.” The same goes for politics, he said: “You know what your message is, and you hammer at it every single day.”“Democrats spent the last two years rescuing America’s small businesses, saving jobs, getting a pandemic under control and investing in America’s future,” Representative Sean Patrick Maloney of New York shot back. “Tom Emmer and his motley crew of MAGA extremists were hawking deadly conspiracy theories and ripping away 50 years of reproductive freedom — that’s what’s on the ballot Tuesday.”Grocery shopping in the Queens borough of New York City.Hiroko Masuike/The New York TimesThey had a hammerHammer it they did. For election ads, Republican researchers clipped examples of Democratic politicians taking their cues from the White House and downplaying the rising costs early on.Ads running nonstop in Michigan’s Eighth Congressional District, for instance, show Representative Dan Kildee saying that inflation was “transitory.” In the state’s Seventh District, Republicans have tried to undercut Representative Elissa Slotkin’s bipartisan image with incessant commercials that claim she voted with Biden “100 percent of the time” and that she “doesn’t get” Americans’ financial struggles.“She voted for trillions in new spending. That’s fueling inflation. I’ll stop the out-of-control spending,” Slotkin’s opponent, Tom Barrett, says in one of them.Republicans have said much less about how they would address inflation if they retake the majority in Congress; economists are highly skeptical that cutting the federal budget when the economy is softening would help.But few Democrats have delivered as sharp a rejoinder as former President Barack Obama, who mocked Republican ideas at a recent campaign rally in Michigan.“When gas prices go up, when grocery prices go up, that takes a bite out of people’s paycheck,” Obama said. He added, “Republicans are having a field day running ads talking about it, but what is their actual solution to it?”“I’ll tell you: They want to gut Social Security, then Medicare, and then give some more tax breaks to the wealthy,” he continued. “And the reason I know that’s their agenda is, listen, that’s their answer to everything.”But there are few signs that the Democrats’ counterattacks are working. In polls, voters now give Republicans an enormous edge on who would do a better job on the economy. In the latest Wall Street Journal survey, only 27 percent of voters said that Biden’s policies “had a positive impact on the economy.”Forecasting models using economic indicators predict that Republicans will pick up as many as 45 House seats next week, though other factors could limit Democrats’ losses, and it’s anyone’s guess who will win the Senate.Emmer, for one, expressed bewilderment that Democrats did not have better answers to Republican attacks on inflation. As early as February 2021, he said, “We knew this is the issue, we knew it was coming.”But when some Democratic lawmakers voiced their concerns that spring about rising prices, he said, their leaders “refused to listen to them.”What to readRepublican candidates are focusing on crime and public safety, but their message is rooted not so much in data or policy as in voters’ feelings of unease. Julie Bosman, Jack Healy and Campbell Robertson have the details.Danny Hakim reports on Senator Catherine Cortez Masto, a Democrat, of Nevada and her Republican rival, Adam Laxalt. Both parties are shoveling money into a pivotal contest defined by two top issues, the economy and abortion.Early turnout is high in most states, Nick Corasaniti writes, and experts see broad Republican energy as well as Democratic enthusiasm in major battlegrounds. But changes in how people vote have added new uncertainty.Fueled by billionaires, political spending is again shattering records, Jonathan Weisman and Rachel Shorey report.Thank you for reading On Politics, and for being a subscriber to The New York Times. — BlakeRead past editions of the newsletter here.If you’re enjoying what you’re reading, please consider recommending it to others. They can sign up here. Browse all of our subscriber-only newsletters here.Have feedback? Ideas for coverage? We’d love to hear from you. Email us at onpolitics@nytimes.com. More

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    White House Deletes Tweet Crediting Biden With Social Security Increase

    The automatic cost of living increase that Social Security beneficiaries are receiving is a result of soaring inflation, not a policy achievement enacted by President Biden.WASHINGTON — The White House on Wednesday deleted a widely mocked Twitter post that misleadingly attributed a recent increase in Social Security payments to older Americans to “President Biden’s leadership.”The tweet, which had been posted on Tuesday, was removed without explanation a day later after it had been skewered by critics and contradicted by a new Twitter feature that allows users to fact-check erroneous assertions. The automatic 8.7 percent cost of living increase that Social Security beneficiaries are receiving is a result of inflation running at a four-decade high, not a policy achievement enacted by Mr. Biden.When asked on Wednesday about the removal of the tweet, Karine Jean-Pierre, the White House press secretary, suggested that it had lacked sufficient context.“Look, the tweet was not complete,” she said. “Usually when we put out a tweet, we post it with context, and it did not have that context.”Ms. Jean-Pierre went on to say that Medicare premiums are decreasing even as Social Security payments go up, suggesting that such information would have rounded out the original Twitter post.“That’s a little bit of context that was not included,” she said. “This means that seniors will have a chance to get ahead of inflation due to the rare combination of rising benefits and falling premiums.”In the final days before the midterm elections next week, Mr. Biden has repeatedly criticized Republicans for proposals that could scale back social safety net programs. He has insisted that he and the Democrats would protect and bolster Social Security and Medicare.The tweet that the White House deleted echoed a remark that the president made this week during a speech in Florida, when he declared, “On my watch, for the first time in 10 years, seniors are getting an increase in their Social Security checks.”When pressed about the similar sentiments, Ms. Jean-Pierre suggested that Mr. Biden was not trying to take credit for the cost of living increase.“We believe that we — we want to lay the — we want to lay our argument out fully,” Ms. Jean-Pierre said. “And that was important to do, as we put out, you know, information like that or as we put out a tweet.”She added: “And that was an incomplete tweet.” More

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    The Truth About America’s Economic Recovery

    As we approach the midterm elections, most political coverage I see frames the contest as a struggle between Republicans taking advantage of a bad economy and Democrats trying to scare voters about the G.O.P.’s regressive social agenda. Voters do, indeed, perceive a bad economy. But perceptions don’t necessarily match reality.In particular, while political reporting generally takes it for granted that the economy is in bad shape, the data tell a different story. Yes, we have troublingly high inflation. But other indicators paint a much more favorable picture. If inflation can be brought down without a severe recession — which seems like a real possibility — future historians will consider economic policy in the face of the pandemic a remarkable success story.When assessing the state of the economy, what period should we use for comparison? I’ve noted before that Republicans like to compare the current economy with an imaginary version of January 2021, one in which gas was $2 a gallon but less pleasant realities, like sky-high deaths from Covid and deeply depressed employment, are airbrushed from the picture. A much better comparison is with February 2020, just before the pandemic hit with full force.So how does the current economy compare with the eve of the pandemic?First, we’ve had a more or less complete recovery in jobs and production. The unemployment rate, at 3.5 percent, is right back where it was before the virus struck. So is the percentage of prime-age adults employed. Gross domestic product is close to what the Congressional Budget Office was projecting prepandemic.This good news shouldn’t be taken for granted. In the early months of the pandemic, there were many predictions that it would lead to “scarring,” persistent damage to jobs and growth. The sluggish recovery from the 2007-9 recession was still fresh in economists’ memories. So the speed with which we’ve returned to full employment is remarkable, so much so that we might dub it the Great Recovery.Still, while workers may have jobs again, hasn’t their purchasing power taken a big hit from inflation? The answer may surprise you.In September, consumer prices were 15 percent higher than they were on the eve of the pandemic. However, average wages were up by 14 percent, almost matching inflation. Wages of nonsupervisory workers, who make up more than 80 percent of the work force, were up 16 percent. So there wasn’t a large hit to real wages overall, although gas and food — which aren’t much affected by policy, but matter a lot to people’s lives — did become less affordable.Obligatory note: There are other measures of both prices and wages, and if you pick and choose you can make the story look a bit worse or a bit better. More important, some Americans are especially exposed to prices that have gone up a lot. On average, however, there hasn’t been a huge hit to living standards.But won’t bringing inflation down require an ugly recession? Maybe, and widespread predictions of recession may be taking a toll on public perceptions. But they are predictions, not an established fact — and many economists don’t agree with those predictions. I won’t rehash that ongoing debate here, except to say that there are plausible arguments to the effect that disinflation will be much easier this time than it was after the 1970s.Despite what I’ve said, however, the public has very negative economic perceptions. Doesn’t that tell us that the economy really is in bad shape?No, it doesn’t. People know how well they, themselves, are doing. Their views about the national economy, however, can diverge sharply from their personal experience.A Federal Reserve survey found that in 2021 there was a huge gap between the rising number of people with a positive view of their own finances and the falling number with a positive view of the economy; perceptions about the local economy, which people can see with their own eyes, were somewhere in between. I suspect that when we get results for 2022 they’ll look similar.To be fair, the resurgence of inflation after decades of quiescence, combined with fears of possible recession, has unnerved many Americans. The point, however, isn’t that the public is wrong to be concerned; it is that negative public views of the economy don’t refute the proposition that the economy is doing well in many though not all dimensions.Now, I’m not suggesting that Democrats spend their final campaigning days telling voters that the economy is actually just fine. It isn’t.But Democrats shouldn’t concede that the overall economy is in bad shape, either. Some very good things have happened on their watch, above all a jobs recovery that has exceeded almost everyone’s expectations. And they have every right to point out that while Republicans may denounce inflation, Republicans have no plan whatsoever to reduce it.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More