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      Americans’ Economic Confidence Is Returning. Will Biden Benefit?

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      The White House is embracing a nascent uptick in economic sentiment. It is likely good news — but how it will map to votes is complicated.Low approval ratings and rock-bottom consumer confidence figures have dogged President Biden for months now, a worrying sign for the White House as the country enters a presidential election year. But recent data suggests the tide is beginning to turn.Americans are feeling more confident about the economy than they have in years, by some measures. They increasingly expect inflation to continue its descent, preliminary data indicates, and they think interest rates will soon moderate.Returning optimism, if it persists, could bolster Mr. Biden’s chances as he pushes for re-election — and spell trouble for former President Donald J. Trump, who is the front-runner for the Republican nomination and has been blasting the Democratic incumbent’s economic record.But political scientists, consumer sentiment experts and economists alike said it was too early for Democrats to take a victory lap around the latest economic data and confidence figures. Plenty of economic risks remain that could derail the apparent progress. In fact, models that try to predict election outcomes based on economic data currently point to a tossup come November.“We’re still very early in the election cycle, from the perspective of economic factors,” said Joanne Hsu, who heads one of the most frequently cited sentiment indexes as director of consumer surveys at the University of Michigan. “A lot can happen.”The University of Michigan’s preliminary survey for January showed an unexpected surge in consumer sentiment: The index climbed to its highest level since July 2021, before inflation surged. While the confidence measure could be revised — and is still slightly below its long-run trend — it has been recovering quickly across age, income, education and geographic groups over the past two months.Confidence Is Still Down, but It’s ImprovingPreliminary January data from the University of Michigan survey suggested that consumer confidence is back at summer 2021 levels.

      Note: Final datapoint, for January, is preliminary.Source: University of Michigan Consumer Sentiment SurveyBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      F.D.A. to Issue First Approval for Mass Drug Imports to States from Canada

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      The agency authorized Florida to purchase medicines directly from wholesalers in Canada, where prices are far cheaper. Pharmaceutical companies oppose the plan.The Food and Drug Administration has allowed Florida to import millions of dollars worth of medications from Canada at far lower prices than in the United States, overriding fierce decades-long objections from the pharmaceutical industry.The approval, issued in a letter to Florida Friday, is a major policy shift for the United States, and supporters hope it will be a significant step forward in the long and largely unsuccessful effort to rein in drug prices. Individuals in the United States are allowed to buy directly from Canadian pharmacies, but states have long wanted to be able to purchase medicines in bulk for their Medicaid programs, government clinics and prisons from Canadian wholesalers.Florida has estimated that it could save up to $150 million in its first year of the program, importing medicines that treat H.I.V., AIDS, diabetes, hepatitis C and psychiatric conditions. Other states have applied to the F.D.A. to set up similar programs.But significant hurdles remain. The pharmaceutical industry’s major lobbying organization, the Pharmaceutical Research and Manufacturers of America, or PhRMA, which has sued over previous importation efforts, is expected to file suit to prevent the Florida plan from going into effect. Some drug manufacturers have agreements with Canadian wholesalers not to export their medicines, and the Canadian government has already taken steps to block the export of prescription drugs that are in short supply.“Canada’s drug supply is too small to meet the demands of both American and Canadian consumers,” Maryse Durette, a spokeswoman for Health Canada, wrote in an email message. “Bulk importation will not provide an effective solution to the problem of high drug prices in the U.S.”Congress passed a law allowing drug importation two decades ago, but federal health officials delayed implementing it for years, citing safety concerns, one of the main arguments drug companies have used against it. In 2020, President Donald J. Trump pushed the law forward, announcing that states could submit importation proposals to the F.D.A. for review and authorization. President Biden added momentum the following year, instructing federal officials to keep working with states on importation plans.Florida applied and later sued the F.D.A., accusing the agency of what Gov. Ron DeSantis called a “reckless delay” in approving the request. Friday’s announcement grew out of that lawsuit; a federal judge had set a Jan. 5 deadline for the F.D.A. to act on the state’s application.Dr. Robert Califf, the F.D.A. commissioner, said in a statement that the agency will be vetting additional state applications to be sure they live up to the program’s goals.“These proposals must demonstrate the programs would result in significant cost savings to consumers without adding risk of exposure to unsafe or ineffective drugs,” Dr. Califf said.Eight other states — Colorado, Maine, New Hampshire, New Mexico, North Dakota, Texas, Vermont and Wisconsin — have laws allowing for a state drug importation program, and many are seeking, or planning to seek, F.D.A. approval.Colorado’s application is pending with the F.D.A. New Hampshire’s application was rejected last year. Vermont’s was deemed incomplete; a spokeswoman said the state was waiting to see how the F.D.A. handled the applications by other states before resubmitting.Colorado officials have signaled that states may face challenges from drugmakers in Canada, among them familiar names like Pfizer, Merck and AstraZeneca. Some drugmakers have written contracts with drug-shipping companies prohibiting deliveries to the United States, Colorado officials said in a report.Drug importation has broad political and public support. A 2019 poll by KFF, a nonprofit health research group, found that nearly 80 percent of respondents favored importation from licensed Canadian pharmacies.“Importation is an idea that resonates with people,” Meredith Freed, a senior policy analyst with KFF, said. “They don’t fully understand why they pay more for the same drug than people in other countries.”With the 2024 presidential election on the horizon, candidates are looking to claim credit for efforts to reduce drug prices. President Biden is spotlighting the Inflation Reduction Act, which empowers Medicare to negotiate prices directly with drugmakers for the first time, but only for a limited number of high cost medicines. Mr. DeSantis, who is challenging Mr. Trump for the Republican nomination, is touting his import plan.Several experts in pharmaceutical policy said that importation from Canada would not address the root cause of high drug prices: the ability of pharmaceutical makers to fend off generic competition by gaming the patent system, and the federal government’s broad failure to negotiate directly with drugmakers over cost.“Seems like political theater to me, where everyone wants to say they did something to drive down the price of prescription drugs,” Nicholas Bagley, a health law expert at the University of Michigan Law School, said of Florida’s plan.Both Mr. Bagley and Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, said that the Inflation Reduction Act is a more direct path to lowering prices; the law’s price negotiation provisions are expected to save the federal government an estimated $98.5 billion over a decade. Drugmakers are suing to block those provisions from taking effect.A protest outside the Pharmaceutical Research and Manufacturers of America in Washington in 2021. PhRMA is likely to file suit to prevent any plan from going into effect.Saul Loeb/Agence France-Presse — Getty ImagesWith its approval in hand, Florida has more work to do. Before it can distribute Canadian drugs, the state must send the F.D.A. details on those it plans to import. The state has to ensure that the drugs are potent and not counterfeit. It also must put F.D.A.-approved labels on medications instead of those used in Canada.The F.D.A. said it would be watching to see if the state upholds safety rules — such as the reporting of any drug side effects — and delivers significant cost savings to consumers. Florida’s approval to import lasts for two years from the date of the first drug shipment.In Canada, health officials have been casting a wary eye on the push to import from their country. In November 2020, shortly after the Trump administration announced that states could submit importation proposals, the Canadian government published its own rule to prevent manufacturers and wholesalers from exporting some drugs that are in short supply.The Canadian government is likely to further restrict exports if they begin to affect Canadians, said Amir Attaran, a law professor at the University of Ottawa. He said the numbers don’t work out for a nation of nearly 40 million to supply medications for a state with 22 million people, much less for 49 other U.S. states.“If all of a sudden Florida is able to extend a vacuum cleaner hose into this country to take what’s in the medicine chest, the supply disruption will be a completely different category,” he said. Dr. Kesselheim, of Harvard, said the F.D.A.’s authorization was unlikely to make a difference in the price of very expensive brand-name drugs, because manufacturers would block wholesalers from exporting the medicines.“I think it’s going to be hard for states to import drugs like that in any kind of scale that would make a difference in terms of lowering prices for patients,” Dr. Kesselheim said. Even so, he said, the F.D.A.’s announcement is significant because it puts to rest the notion that drug importation cannot be accomplished safely.Mr. Bagley of the University of Michigan said there was a simpler solution to high drug prices than patchwork state importation programs: Having the U.S. government negotiate with drug companies over prices, just as many other nations, including Canada, do.“This whole thing is a jerry-rigged, complicated approach to a problem that’s amenable to a pretty straightforward solution, which is that you empower the government to bargain over the price for drugs,” he said. “So instead, we’re sort of trying to exploit the machinery that Canada has created and that we were too timid to create.” More

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      Want to Understand 2024? Look at 1948.

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      Americans were angry with Truman because of high prices in the aftermath of World War II, even as other economic signals looked promising.President Truman and his wife, Bess, during his 1948 whistle-stop campaign.Associated PressIn the era of modern consumer confidence data, there has never been an economy quite like this recent one — with prices rising so high and unemployment staying so low.But just a few years before the consumer sentiment survey index became widely available in 1952, there was a period of economic unrest that bears a striking resemblance to today: the aftermath of World War II, when Americans were near great prosperity yet found themselves frustrated by the economy and their president.If there’s a time that might make sense of today’s political moment, postwar America might just be it. Many analysts today have been perplexed by public dissatisfaction with the economy, as unemployment and gross domestic product have remained strong and as inflation has slowed significantly after a steep rise. To some, public opinion and economic reality are so discordant that it requires a noneconomic explanation, sometimes called “vibes,” like the effect of social media or a pandemic hangover on the national mood.But in the era of modern economic data, Harry Truman was the only president besides Joe Biden to oversee an economy with inflation over 7 percent while unemployment stayed under 4 percent and G.D.P. growth kept climbing. Voters weren’t overjoyed then, either. Instead, they saw Mr. Truman as incompetent, feared another depression and doubted their economic future, even though they were at the dawn of postwar economic prosperity.The source of postwar inflation was fundamentally similar to post-pandemic inflation. The end of wartime rationing unleashed years of pent-up consumer demand in an economy that hadn’t fully transitioned back to producing butter instead of guns. A year after the war, wartime price controls ended and inflation skyrocketed. A great housing crisis gripped the nation’s cities as millions of troops returned from overseas after 15 years of limited housing construction. Labor unrest roiled the nation and exacerbated production shortages. The most severe inflation of the last 100 years wasn’t in the 1970s, but in 1947, reaching around 20 percent.According to the historian James T. Patterson, “no domestic issue of these years did Truman more damage than the highly contentious question of what to do about wartime restraints on prices.”Mr. Truman’s popularity collapsed. By spring in 1948, an election year, his approval rating had fallen to 36 percent, down from over 90 percent at the end of World War II. He fell behind the Republican Thomas Dewey in the early head-to-head polling. He was seen as in over his head. The New Republic ran a front-page editorial titled: “As a candidate for president, Harry Truman should quit.”Hubert Humphrey, mayor of Minneapolis and later a vice president and Democratic presidential nominee, spoke before a Senate committee on anti-inflation controls in 1948.Associated PressIn retrospect, it’s hard to believe voters were so frustrated. Historians generally now consider Mr. Truman one of the great presidents, and the postwar period was the beginning of the greatest economic boom in American history. By any conceivable measure, Americans were unimaginably better off than during the Great Depression a decade earlier. Unemployment remained low by any standard, and consumers kept spending. The sales of seemingly every item — appliances, cars and so on — were an order of magnitude higher than before the war.Yet Americans were plainly dissatisfied. Incomes in 1948 were twice what they were in 1941, but statistically their dissatisfaction is probably best explained by the decline in real incomes in 1947, just as real incomes declined in 2021-22. The polling in the run-up to the 1948 election — archived at the Roper Center — bears the hallmarks of voter dissatisfaction:Despite the extraordinarily positive developments of the last decade, voters were pessimistic about the future. They believed a depression was likely in the next few years. As late as summer 1948, they were likelier to think things in America would get worse in the years ahead than to get better. They expected prices to keep rising.In November 1947, Gallup found that more than two-thirds of Americans said they were finding it harder to make ends meet than the year before, while almost no one said it was easier.In polling throughout 1947 and 1948, a majority supported reinstating wartime rationing and price controls.In December 1947, more than 70 percent of adults said they would want their own wages to decline in order to bring prices down.Prices seemed to weigh heavily on Americans heading into the election. Voters said that if they got a chance to talk with Mr. Truman about anything, it would be the cost of living and getting the economy back to normal. Ahead of the conventions, voters said a plan to address high prices was the No. 1 priority they wanted in a party platform. More voters said they wanted prices to be addressed over the next four years than any other issue.A rally for equal rights outside the 1948 Democratic convention in Philadelphia.Bettman/Getty ImagesThe Dixiecrats, a breakaway segregationist party, held a convention of their own in Birmingham, Ala.Bettmann/Getty ImagesThe importance of the economic issue faced stiff competition from the rising Cold War, the enactment of the Marshall Plan, the Berlin airlift, the formation of Israel and the subsequent First Arab-Israeli War, Mr. Truman’s decision to desegregate the military and the rise of the Dixiecrats.The Cold War, civil rights, Israel and other domestic issues combined to put extraordinary political pressure on an increasingly fractured Democratic coalition. On the left, the former vice president Henry Wallace ran against Mr. Truman as a Progressive; he also ran as someone who was unequivocally pro-Israel, threatening to deny Mr. Truman the support of Jewish voters who had voted all but unanimously for Franklin D. Roosevelt. On the right, the segregationist South defected from the Democrats at the convention over the party’s civil rights plank, again threatening to deny him the support of an overwhelmingly Democratic voting bloc.Truman and the Republican nominee, Thomas Dewey, in August 1948. Dewey led in the polls.Nat Fein/The New York TimesHe won, actually.Frank Cancellare/United Press InternationalIn the end, Mr. Truman won in perhaps the most celebrated comeback in American electoral history, including the iconic “Dewey Beats Truman” headline and photograph. He had barnstormed the country with an economically populist campaign that argued Democrats were on the side of working people while reminding voters of the Great Depression. You might well remember from your U.S. history classes that he blamed the famous “Do Nothing Congress” for not enacting his agenda.What you might not have learned in history class is that Mr. Truman attacked the “Do Nothing Congress“ first and foremost for failing to do anything about prices. The text of his speech at the Democratic convention does not quite do justice to his impassioned attack on Republicans for failing to extend price controls in 1946, and for their platform on prices. Finally, he called for a special session of Congress to act on prices and housing shortages (the links correspond to the YouTube video of those parts of his convention speech, for those interested). In short, congressional failure to act on prices was central to his critique of Republicans.In this respect, Mr. Truman was probably in a stronger position than Mr. Biden. Mr. Truman could blame Republicans for inflation; he could argue he had a solution for inflation; and he could link his position on inflation to his broader message about the Democrats as a party for working people. Polling at the time suggested that voters supported price controls, supported his special session, and did not necessarily blame Mr. Truman for inflation. In fact, more voters blamed Congress, business and labor than the president himself.Where Mr. Biden can still hope to match Mr. Truman is in economic reality, as inflation today is falling just as it was in the run-up to the 1948 election.In January 1948, inflation was 10 percent; by the end of October, it had fallen by half, and would reach one percent by January 1949. At election time, only 18 percent of voters expected prices would be higher in six months; just a few months earlier in June, a majority did so. It seems reasonable to wonder whether Mr. Truman might have lost the election had it been held a few months earlier.Despite those excellent conditions for a comeback, Mr. Truman’s electoral weakness was still stark. He had a powerful message and an improving economy, but he won by just 4.5 percentage points. The third-party candidates Mr. Wallace and Strom Thurmond succeeded in denying Mr. Truman key elements of the Democratic base that the party might have imagined it could take for granted just a few years earlier. He lost much of the Deep South without the support of the Dixiecrats and even lost New York, thanks to considerable defections on the left and among Jewish voters. No Democratic presidential would ever again reassemble the so-called New Deal coalition.But if 1948 is a mixed precedent for Mr. Biden, it’s a good precedent for today’s sour economic mood. It might betray a simple fact about public opinion: Voters hate inflation so much that they won’t ever like the economy if prices go up. There is no precedent in the era of consumer sentiment data for voters to have an above-average view of the economy once inflation cracks 5 percent — the recent high was 9 percent in June 2022 — even when unemployment is extremely low. It may just be that simple; indeed, consumer sentiment has begun to tick up over the last year, as inflation has declined to 3 percent.Alternately, 1948 and this era may suggest a more complex lesson about public opinion in the wake of pandemic or war, as high postwar and post-pandemic expectations quickly get dashed by the reality that the world isn’t returning to “normal” quite so quickly. Not only are high hopes dashed, but they also yield many kinds of economic dysfunction beyond high prices, from supply chain problems and housing shortages to “help wanted” signs and rising interest rates.Indeed, the famous “return to normalcy” election in 1920 — the largest popular vote landslide in American history — followed World War I and the 1918-1920 flu pandemic, which brought a recession and even higher inflation than in the 1940s.Normalcy did not come fast enough to save the party in power in 1920, the Democrats, but in retrospect it wasn’t too far off. The Roaring Twenties were just around the corner. And normalcy was just beginning to arrive in 1948, when Mr. Truman won re-election. The country was at the dawn of the prosperous, idealized 1950s “Leave It to Beaver” era that still lingers in the public imagination.If something similar is almost at hand, it can’t come soon enough for Mr. Biden. More

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      ¿Qué le espera a la economía global en 2024?

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      Con dos guerras persistentes y la incertidumbre de 50 elecciones nacionales, la inestabilidad financiera podría agravarse en todo el mundo.Los ataques al tráfico marítimo indispensable en los estrechos del mar Rojo por parte de una decidida banda de militantes en Yemen —una repercusión de la guerra entre Israel y Hamás en la franja de Gaza— le está inyectando otra dosis de inestabilidad a una economía mundial que está batallando con las tensiones geopolíticas en aumento.El riesgo de escalada del conflicto en Medio Oriente es la última de una serie de crisis impredecibles, como la pandemia del COVID-19 y la guerra en Ucrania, que han ocasionado profundas heridas a la economía mundial, la han desviado de su curso y le han dejado cicatrices.Por si fuera poco, hay más inestabilidad en el horizonte debido a la oleada de elecciones nacionales cuyas repercusiones podrían ser profundas y prolongadas. Más de dos mil millones de personas en unos 50 países —entre ellos India, Indonesia, México, Sudáfrica, Estados Unidos y los 27 países del Parlamento Europeo— acudirán a las urnas el año entrante. En total, los participantes en la olimpiada electoral de 2024 dan cuenta del 60 por ciento de la producción económica mundial.En las democracias sólidas, los comicios se están llevando a cabo en un momento en que va en aumento la desconfianza en el gobierno, los electores están muy divididos y hay una ansiedad profunda y constante por las perspectivas económicasUn barco cruza el canal de Suez en dirección al mar Rojo. Los ataques en el mar Rojo han hecho subir los fletes y los seguros.Mohamed Hossam/EPA, vía ShutterstockUna valla publicitaria anunciando las elecciones presidenciales en Rusia, que tendrán lugar en marzo.Dmitri Lovetsky/Associated PressWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      Red Sea Shipping Halt Is Latest Risk to Global Economy

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      Next year could see increasing volatility as persistent military conflicts and economic uncertainty influence voting in national elections across the globe.The attacks on crucial shipping traffic in the Red Sea straits by a determined band of militants in Yemen — a spillover from the Israeli-Hamas war in Gaza — is injecting a new dose of instability into a world economy already struggling with mounting geopolitical tensions.The risk of escalating conflict in the Middle East is the latest in a string of unpredictable crises, including the Covid-19 pandemic and the war in Ukraine, that have landed like swipes of a bear claw on the global economy, smacking it off course and leaving scars.As if that weren’t enough, more volatility lies ahead in the form of a wave of national elections whose repercussions could be deep and long. More than two billion people in roughly 50 countries, including India, Indonesia, Mexico, South Africa, the United States and the 27 nations of the European Parliament, will head to the polls. Altogether, participants in 2024’s elections olympiad account for 60 percent of the world’s economic output.In robust democracies, elections are taking place as mistrust in government is rising, electorates are bitterly divided and there is a profound and abiding anxiety over economic prospects.A ship crossing the Suez Canal toward the Red Sea. Attacks on the Red Sea have pushed up freight and insurance rates.Mohamed Hossam/EPA, via ShutterstockA billboard promoting presidential elections in Russia, which will take place in March.Dmitri Lovetsky/Associated PressEven in countries where elections are neither free nor fair, leaders are sensitive to the economy’s health. President Vladimir V. Putin’s decision this fall to require exporters to convert foreign currency into rubles was probably done with an eye on propping up the ruble and tamping down prices in the run-up to Russia’s presidential elections in March.The winners will determine crucial policy decisions affecting factory subsidies, tax breaks, technology transfers, the development of artificial intelligence, regulatory controls, trade barriers, investments, debt relief and the energy transition.A rash of electoral victories that carry angry populists into power could push governments toward tighter control of trade, foreign investment and immigration. Such policies, said Diane Coyle, a professor of public policy at the University of Cambridge, could tip the global economy into “a very different world than the one that we have been used to.”In many places, skepticism about globalization has been fueled by stagnant incomes, declining standards of living and growing inequality. Nonetheless, Ms. Coyle said, “a world of shrinking trade is a world of shrinking income.”And that raises the possibility of a “vicious cycle,” because the election of right-wing nationalists is likely to further weaken global growth and bruise economic fortunes, she warned.A campaign rally for former President Donald J. Trump in New Hampshire in December.Doug Mills/The New York TimesA line of migrants on their way to a Border Patrol processing center at the U.S.-Mexico border. Immigration will be a hot topic in upcoming elections.Rebecca Noble for The New York TimesMany economists have compared recent economic events to those of the 1970s, but the decade that Ms. Coyle said came to mind was the 1930s, when political upheavals and financial imbalances “played out into populism and declining trade and then extreme politics.”The biggest election next year is in India. Currently the world’s fastest-growing economy, it is jockeying to compete with China as the world’s manufacturing hub. Taiwan’s presidential election in January has the potential to ratchet up tensions between the United States and China. In Mexico, the vote will affect the government’s approach to energy and foreign investment. And a new president in Indonesia could shift policies on critical minerals like nickel.The U.S. presidential election, of course, will be the most significant by far for the world economy. The approaching contest is already affecting decision-making. Last week, Washington and Brussels agreed to suspend tariffs on European steel and aluminum and on American whiskey and motorcycles until after the election.The deal enables President Biden to appear to take a tough stance on trade deals as he battles for votes. Former President Donald J. Trump, the likely Republican candidate, has championed protectionist trade policies and proposed slapping a 10 percent tariff on all goods coming into the United States — a combative move that would inevitably lead other countries to retaliate.Mr. Trump, who has echoed authoritarian leaders, has also indicated that he would step back from America’s partnership with Europe, withdraw support for Ukraine and pursue a more confrontational stance toward China.Workers on a car assembly line in Hefei, China. Beijing has provided enormous incentives for electric vehicles.Qilai Shen for The New York TimesA shipyard in India, which is jockeying to compete with China as the world’s largest manufacturing hub.Atul Loke for The New York Times“The outcome of the elections could lead to far-reaching shifts in domestic and foreign policy issues, including on climate change, regulations and global alliances,” the consulting firm EY-Parthenon concluded in a recent report.Next year’s global economic outlook so far is mixed. Growth in most corners of the world remains slow, and dozens of developing countries are in danger of defaulting on their sovereign debts. On the positive side of the ledger, the rapid fall in inflation is nudging central bankers to reduce interest rates or at least halt their rise. Reduced borrowing costs are generally a spur to investment and home buying.As the world continues to fracture into uneasy alliances and rival blocs, security concerns are likely to loom even larger in economic decisions than they have so far.China, India and Turkey stepped up to buy Russian oil, gas and coal after Europe sharply reduced its purchases in the wake of Moscow’s invasion of Ukraine. At the same time, tensions between China and the United States spurred Washington to respond to years of strong-handed industrial support from Beijing by providing enormous incentives for electric vehicles, semiconductors and other items deemed essential for national security.A protest in Yemen on Friday against the operation to safeguard trade and protect ships in the Red Sea.Osamah Yahya/EPA, via ShutterstockThe drone and missile attacks in the Red Sea by Iranian-backed Houthi militia are a further sign of increasing fragmentation.In the last couple of months, there has been a rise in smaller players like Yemen, Hamas, Azerbaijan and Venezuela that are seeking to change the status quo, said Courtney Rickert McCaffrey, a geopolitical analyst at EY-Parthenon and an author of the recent report.“Even if these conflicts are smaller, they can still affect global supply chains in unexpected ways,” she said. “Geopolitical power is becoming more dispersed,” and that increases volatility.The Houthi assaults on vessels from around the world in the Bab-el-Mandeb strait — the aptly named Gate of Grief — on the southern end of the Red Sea have pushed up freight and insurance rates and oil prices while diverting marine traffic to a much longer and costlier route around Africa.Last week, the United States said it would expand a military coalition to ensure the safety of ships passing through this commercial pathway, through which 12 percent of global trade passes. It is the biggest rerouting of worldwide trade since Russia’s invasion of Ukraine in February 2022.Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the impact of the attacks had so far been limited. “From an economic perspective, we’re not seeing huge increase in oil and gas prices,” Mr. Vistesen said, although he acknowledged that the Red Sea assaults were the “most obvious near-term flashpoint.”Uncertainty does have a dampening effect on the economy, though. Businesses tend to adopt a wait-and-see attitude when it comes to investment, expansions and hiring.“Continuing volatility in geopolitical and geoeconomic relations between major economies is the biggest concern for chief risk officers in both the public and private sectors,” a midyear survey by the World Economic Forum found.With persistent military conflicts, increasing bouts of extreme weather and a slew of major elections ahead, it’s likely that 2024 will bring more of the same. More

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      Vibes, the Economy and the Election

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      Recent positive news may put two theories on economic disenchantment to the test.The New York Stock Exchange on Thursday. Stocks have boomed in recent days.Angela Weiss/Agence France-Presse — Getty ImagesA Federal Reserve announcement about the future of the funds rate is not the sort of news that would typically factor into analysis of public opinion and the economy. Usually, analysts look at numbers like gross domestic product and unemployment, not something as arcane as a federal funds rate.But this isn’t a normal economy, and public opinion about the economy hasn’t been normal, either.For two years, the public has said the economy is doing poorly, even though it appears healthy by many traditional measures. This has prompted a fierce debate over whether the public’s views are mostly driven by concrete economic factors like high prices or something noneconomic — like a bad “vibe” brought on by social media memes or Fox News.The Fed’s projection Wednesday that it will cut rates three times over the next year probably won’t generate TikTok memes, but it’s exactly the kind of event that may ultimately resolve this debate one way or another — with important and potentially decisive consequences for the 2024 presidential election.To cut right to the heart of the problem underlying this debate: High prices do not seem to fully explain why voters are this upset about the economy.Yes, voters are upset about high prices, and prices are indeed high. This easily and even completely explains why voters think this economy is mediocre: In the era of consumer sentiment data, inflation has never risen so high without pushing consumer sentiment below average and usually well below average. This part is not complicated.But it’s harder to argue that voters should believe the economy is outright terrible, even after accounting for inflation. Back in early 2022, I estimated that consumer confidence was running at least 10 to 15 percentage points worse than one would expect historically, after accounting for prices and real disposable income.I could run through the numbers, but just consider this instead: The low point for consumer sentiment in 2022 wasn’t just low; it was a record low for the index dating all the way to 1952. That’s right: Consumer sentiment in 2022 was worse than it was in the 1970s, when higher inflation was sustained for much longer, and worse than it was in the depths of the Great Recession.Now, other gauges of consumer confidence don’t show things quite so bad, but even the rosier measures show Americans about as down on the economy as they were 15 years ago, when mass layoffs drove a doubling of the unemployment rate to 10 percent and when household net worth fell $11.5 trillion. You don’t need fancy math to see there’s something left to be explained.The two sides of this debate disagree about why, exactly, the public is so sour on the economy.The Fed chairman, Jerome Powell, on Wednesday.Brendan Smialowski/Agence France-Presse — Getty ImagesThe case for vibesOne side argues that public opinion about the economy is now being driven by noneconomic factors, and in particular vibes, or a prevailing mood that colors our perception of reality. In this view, the vibe today is so biting and dour that public opinion is no longer responsive to material economic reality: The “vibe” is bad, so voters can’t see that the economy is good.Strictly speaking, there’s no reason vibes can’t be grounded in tangible economic conditions — like stimulus checks going away — but in practice this winds up being an argument for how noneconomic factors prevent voters from appreciating the economy. Those factors could include conservative media, cynical social media, the mental health crisis, a pandemic hangover, President Biden or really anything else that might dampen the economic spirit of Americans.There might well be something to the vibes argument. There might even be a lot to it. But there’s just not much evidence to support it. This side fundamentally rests its case on a diagnosis of exclusion: If we don’t buy the economic argument, then it must be noneconomic — and if it’s noneconomic, it can really be anything. The power of vibes here is naturally indeterminate, and allowing limitless explanatory power to a theory without evidence should give any serious thinker some pause.If this side of the debate is right, the consequences for Mr. Biden are pretty bleak. In this view, the economy ought to be helping him, but instead it will presumably be a major drag. An 81-year-old white male moderate may be the worst possible Democrat to turn around the vibe on TikTok.The case for the economy explaining allThe other side of the debate argues that the explanation is fundamentally economic, but that the factors dragging down consumers aren’t neatly captured by the usual economic statistics.There are two kinds of adverse economic factors that this side of the debate has in mind. One is economic dysfunction — some basic things have become harder. It’s harder to hire. It’s harder to get a loan. It’s more expensive to buy things. At times it was impossible to buy things because of supply chain shortages. It’s harder to buy a home. It’s harder to sell a home. If you wanted to engage in these kinds of economic activities, you should have done them before the fall of 2021.It’s easy to see how these challenges could affect economic perceptions, and these problems can be missed by economic statistics. The usual data measures the extent of economic activity, not its ease. That people still have the resources to spend, hire and buy doesn’t change that voters may rationally conclude the economy is bad if it makes it harder for them to undertake economic activity.The other kind of adverse economic factor is the pessimism about future growth. A statistic like unemployment says a lot about the economy today, but little about the economy tomorrow. Expectations of future growth are an important component of consumer confidence indexes, and for good reason: The desire to turn money into more money is foundational to American capitalist culture. Here again, there have been reasons to anticipate limited economic growth or even a recession. Investors have expected it, as evidenced by the yield curve. There was even a reasonable assumption that the Fed would be so focused on slowing inflation by keeping interest rates high that a recession would be all but inevitable.In contrast to the “vibes” theory, there’s a lot of evidence for these various phenomena. They also fit into the framework of consumer confidence as a function of concrete economic conditions.But whether these nontraditional economic problems add up to explain what’s going on is much harder to say. They might explain a lot and might even explain all of it, but it’s impossible to prove empirically without any precedent for today’s economy in the era of modern consumer confidence data. There has simply never been a time when unemployment has stayed so low and prices have gone up so much, let alone with all of these additional twists like supply chain shortages and expectations of recession.What can be said is that the theory of concrete economic problems will be put to the test as soon as economic reality improves, and that time might finally be at hand.Many states now have gas prices below $3 a gallon.Adam Davis/EPA, via ShutterstockThe economy appears to be improvingAfter a few months of stubborn inflation, rising gas prices and interest rates, and a falling stock market, the last month or so has brought excellent economic news. The stock market has gone up nearly 15 percent since New York Times/Siena College polls were in the field in late October. The inflation trajectory looks good. Mortgage rates are falling. Gas prices are down. Once-skeptical economists have declared that a “soft landing” seems at hand. And now the Fed is forecasting rate cuts, which augurs growth, confidence in lower inflation and eventually a return to a more normal economy.Put it together, and the big economic barriers could be poised to fade. If they do and the material economic side of the debate is correct, consumer confidence might quickly begin to recover. And Mr. Biden’s re-election chances would begin to improve, at least to the extent that the economy and not another issue, like his age, is responsible for Donald J. Trump’s lead in the polls.While it’s too early to say, there are certainly signs that consumer confidence could rise. For one, it has already been doing so. Overall, consumer confidence is up nearly 20 points since inflation peaked in the summer of 2022. That rate of improvement is in line with prior, vigorous periods of economic expansion, like during the 1990s. The monthly pattern in consumer confidence even seems to align with the news: Last month’s strong economic data corresponded with a rebound in consumer confidence that erased the declines of the past four months, when the economic news was worse than over the summer.That’s what we would expect if real economic factors were driving consumer confidence, though it’s not enough to disprove the vibe theory. To send the vibe argument away, we would need to start to see the gap closing between expected and actual consumer confidence. If fears of a recession fade and a more normal economic environment returns, there might still be enough time for that gap to close before Mr. Biden stands for re-election. More

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      Biden Faces Economic Challenges as Cost-of-Living Despair Floods TikTok

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      Economic despair dominates social media as young people fret about the cost of living. It offers a snapshot of the challenges facing Democrats ahead of the 2024 election.Look at economic data, and you’d think that young voters would be riding high right now. Unemployment remains low. Job opportunities are plentiful. Inequality is down, wage growth is finally beating inflation, and the economy has expanded rapidly this year.Look at TikTok, and you get a very different impression — one that seems more in line with both consumer confidence data and President Biden’s performance in political polls.Several of the economy-related trends getting traction on TikTok are downright dire. The term “Silent Depression” recently spawned a spate of viral videos. Clips critical of capitalism are common. On Instagram, jokes about poor housing affordability are a genre unto themselves.Social media reflects — and is potentially fueling — a deep-seated angst about the economy that is showing up in surveys of younger consumers and political polls alike. It suggests that even as the job market booms, people are focusing on long-running issues like housing affordability as they assess the economy.The economic conversation taking place virtually may offer insight into the stark disconnect between optimistic economic data and pessimistic feelings, one that has puzzled political strategists and economists.Never before was consumer sentiment this consistently depressed when joblessness was so consistently low. And voters rate Mr. Biden badly on economic matters despite rapid growth and a strong job market. Young people are especially glum: A recent poll by The New York Times and Siena College found that 59 percent of voters under 30 rated the economy as “poor.”President Biden’s campaign is working with content creators on TikTok to “amplify a positive, affirmative message” on the economy, a deputy campaign manager said.Desiree Rios for The New York TimesThat’s where social media could offer insight. Popular interest drives what content plays well — especially on TikTok, where going viral is often the goal. The platforms are also an important disseminator of information and sentiment.“A lot of people get their information from TikTok, but even if you don’t, your friends do, so you still get looped into the echo chamber,” said Kyla Scanlon, a content creator focused on economic issues who posts carefully researched explainers across TikTok, Instagram and X.Ms. Scanlon rose to prominence in the traditional news media in part for coining and popularizing the term “vibecession” for how bad consumers felt in 2022 — but she thinks 2023 has seen further souring.“I think people have gotten angrier,” she said. “I think we’re actually in a worse vibecession now.”Surveys suggest that people in Generation Z, born after 1996, heavily get their news from social media and messaging apps. And the share of U.S. adults who turn to TikTok in particular for information has been steadily climbing. Facebook is still a bigger news source because it has more users, but about 43 percent of adults who use TikTok get news from it regularly, according to a new survey by the Pew Research Center.It is difficult to say for certain whether negative news on social media is driving bad feelings about the economy, or about the Biden administration. Data and surveys struggle to capture exactly what effect specific news delivery channels — particularly newer ones — have on people’s perceptions, said Katerina Eva Matsa, director of news and information research at the Pew Research Center.“Is the news — the way it has evolved — making people view things negatively?” she asked. It’s hard to tell, she explained, but “how you’re being bombarded, entangled in all of this information might have contributed.”More Americans on TikTok Are Going There for NewsShare of each social media site’s users who regularly get news there, 2020 vs. 2023

      Source: Pew Research Center surveys of U.S. adultsBy The New York TimesMr. Biden’s re-election campaign team is cognizant that TikTok has supplanted X, formerly known as Twitter, for many young voters as a crucial information source this election cycle — and conscious of how negative it tends to be. White House officials say that some of those messages accurately reflect the messengers’ economic experiences, but that others border on misinformation that social media platforms should be policing.Rob Flaherty, a deputy campaign manager for Mr. Biden, said the campaign was working with content creators on TikTok in an effort to “amplify a positive, affirmative message” about the economy.A few political campaign posts promoting Mr. Biden’s jobs record have managed to rack up thousands of likes. But the “Silent Depression” posts have garnered hundreds of thousands — a sign of how much negativity is winning out.In those videos, influencers compare how easy it was to get by economically in 1930 versus 2023. The videos are misleading, skimming over the crucial fact that roughly one in four adults was unemployed in 1933, compared with four in 100 today. And the data they cite are often pulled from unreliable sources.But the housing affordability trend that the videos spotlight is grounded in reality. It has gotten tougher for young people to afford a property over time. The cost of a typical house was 2.4 times the typical household income around 1940, when government data start. Today, it’s 5.8 times.Nor is it just housing that’s making young people feel they’re falling behind, if you ask Freddie Smith, a 35-year-old real estate agent in Orlando, Fla., who created one especially popular “Silent Depression” video. Recently, it is also the costs of gas, groceries, cars and rent.“I think it’s the perfect storm,” Mr. Smith said. “It’s this tug of war that millennials and Gen Z are facing right now.”Inflation has cooled notably since peaking in the summer of 2022, which the Biden administration has greeted as a victory. Still, that just means that prices are no longer climbing as rapidly. Key costs remain noticeably higher than they were just a few years ago. Groceries are far more expensive than in 2019. Gas was hovering around $2.60 a gallon at the start of 2020, for instance, but is around $3.40 now.Young Americans Are Spending More and Earning MoreIncome after taxes and expenditures for householders under 25

      Source: Bureau of Labor Statistics Consumer Expenditure Survey By The New York TimesThose higher prices do not necessarily mean people are worse off: Household incomes have also gone up, so people have more money to cover the higher costs. Consumer expenditure data suggests that people under 25 — and even 35 — have been spending a roughly equivalent or smaller share of their annual budgets on groceries and gas compared with before the pandemic, at least on average.“I think things just feel harder,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan, explaining that people have what economists call a “money illusion” and think of the value of a dollar in fixed terms.And housing has genuinely been taking up a bigger chunk of the young consumer’s budget than in the years before the pandemic, as rents, home prices and mortgage costs have all increased.Housing Is Eating Up Young People’s BudgetsShare of spending devoted to each category for people under 25

      Source: Bureau of Labor Statistics Consumer Expenditure SurveyBy The New York TimesIn addition to prices, content about student loans has taken off in TikTok conversations (#studentloans has 1.3 billion views), and many of the posts are unhappy.Mr. Biden’s student-loan initiatives have been a roller coaster for millions of young Americans. He proposed last year to cancel as much as $20,000 in debt for borrowers who earn less than $125,000 a year, a plan that was estimated to cost $400 billion over several decades, only to see the Supreme Court strike down the initiative this summer.Mr. Biden has continued to push more tailored efforts, including $127 billion in total loan forgiveness for 3.6 million borrowers. But last month, his administration also ended a pandemic freeze on loan payments that applied to all borrowers — some 40 million people.The administration has tried to inject more positive programming into the social media discussion. Mr. Biden met with about 60 TikTok creators to explain his initial student loan forgiveness plan shortly after announcing it. The campaign team also sent videos to key creators, for possible sharing, of young people crying when they learned their loans had been forgiven.The Biden campaign does not pay those creators or try to dictate what they are saying, though it does advertise on digital platforms aggressively, Mr. Flaherty said.“It needs to sound authentic,” he said. More

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      Biden Makes Lower Drug Prices a Centerpiece of His 2024 Campaign

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      President Biden’s Inflation Reduction Act allows Medicare to negotiate some drug prices, a change that the pharmaceutical industry and Republicans have opposed for decades.As he heads toward a re-election campaign next year, President Biden is betting that his success in pushing for policies intended to lower health care costs for millions of Americans will be rewarded by voters at the ballot box.In speech after speech, Mr. Biden talks about capping the cost of insulin at $35, putting new limits on medical expenses for seniors, making some vaccines free and pushing to lower the prices of some of the most expensive drugs in the world.At the White House, Mr. Biden and his advisers have already begun to elevate the issue as a centerpiece of his agenda. And at his campaign headquarters in Wilmington, Del., aides are preparing television ads, talking points and speeches arguing that Mr. Biden’s push for lower health care costs is a stark contrast with his Republican opponents.“The president will have a very strong case to make,” said Senator Amy Klobuchar of Minnesota, a member of the president’s national campaign advisory board. “Not only will people want to keep the benefits they have seen, they are going to want to get the benefits that are coming their way.”On Tuesday, the White House announced that the Biden administration will negotiate on behalf of Medicare recipients for lower prices on 10 popular — and expensive — drugs that are used to treat diabetes, heart disease and other chronic illnesses.The move was made possible by passage last year of Mr. Biden’s Inflation Reduction Act, which for the first time allows Medicare to negotiate drug prices for older adults, a change that has been opposed by the pharmaceutical industry for decades.Republicans also generally oppose giving the government the right to negotiate drug prices. But the candidates for the Republican presidential nomination have said little about the cost of medication, focusing instead on abortion, transgender medical issues and Covid lockdowns.In his speeches, Mr. Biden rails against the industry and his Republican adversaries in Congress, all of whom voted against the law that included the prescription drug provisions. Aides say it is an effective message.“Today is the start of a new deal for patients where Big Pharma doesn’t just get a blank check at your expense,” the president said at a White House event celebrating the change.Since signing the law a year ago, Mr. Biden has repeatedly called it one of his proudest legislative victories. But his approval numbers have hardly budged. And while polls show that the new policy is widely popular among Americans who know about it, they also suggest that far fewer people are even aware that the change was made.That is most likely because prices on just the first handful of drugs are not scheduled to actually drop until 2026 at the earliest, assuming Mr. Biden’s program survives legal challenges. Drug companies have filed numerous lawsuits against the administration that claim the law is unconstitutional. Court cases could drag on for years.In its lawsuit against the administration, the Pharmaceutical Research and Manufacturers of America, an industry trade group, called the plan for negotiated prices “a government mandate disguised as negotiation.”Even if Mr. Biden’s plan goes into effect, older adults who have made the choice to ration their drugs will have to continue doing so until more than a year after the 2024 presidential election.Danny Cottrell, 67, a pharmacist who owns his retail pharmacy group in Brewton, Ala., said he regularly advised his Medicare patients on the ins and outs of the government’s prescription program. He welcomed Mr. Biden’s changes, but said it would be up to people like him to explain the complicated process.“I got to remind them, this doesn’t start till 2026,” Mr. Cottrell said. “And then also remind them this thing will change several times between now and then.”Neera Tanden, Mr. Biden’s top domestic policy adviser, said the White House was confident that the plan would survive the legal challenges.“It is absurd to argue that negotiation is unconstitutional,” she said in an interview. “There’s nothing in the Constitution that says Medicare negotiating drug prices is unconstitutional.”But more broadly, Ms. Tanden said that she and the president’s other advisers in the West Wing were determined to make the push for lower health care costs a central part of Mr. Biden’s message to Americans.And next September, just weeks before Election Day, the administration will announce the results of the yearlong negotiations over the first 10 drugs.“We plan to work extensively, to really remind folks of this issue,” Ms. Tanden said.For the people leading Mr. Biden’s re-election campaign, the political benefits of focusing on lower health care costs are clear.Some polls show that 80 percent of Americans support giving the government the ability to negotiate lower prices for Medicare, much the way it already does for veterans and members of the military.Campaign aides said talking about lower costs of drugs or limits on out-of-pocket medical expenses is one way to help Mr. Biden win support among seniors, who traditionally have voted for Republicans in greater numbers. That is especially important in battleground states like Michigan, Arizona, Georgia and Ohio, where increasing support among older adults will be critical in close contests.The campaign’s early television ads have included numerous references to the president’s efforts to lower health care costs. A spokesman for the campaign said the issue of health care would be a central feature of a $25 million ad blitz focusing on what the president has done to lower costs overall and make economic progress.Kate Bedingfield, who served as Mr. Biden’s communications director for the first two years of his presidency, said the issue had political benefits even when it came to appealing to people who do not benefit directly from the specific cost reductions.“It draws a really clear contrast with the Republicans, who have stood in the way and continue to stand in the way of getting more done on this,” she said.Representative Michael C. Burgess, Republican of Texas and a doctor, said Mr. Biden’s drug price negotiations were akin to government-imposed price controls that would lead to drug shortages.“This administration’s approach goes beyond ‘negotiation,’” he said in a statement. “Instead, it holds pharmaceutical companies hostage, jeopardizing their future innovation and the well-being of American patients.”Mr. Biden’s campaign aides said a debate with Republicans about the cost of medical care was one they were eager to have.“MAGA Republicans running for president want to repeal the Inflation Reduction Act, which would deliver a massive win for Big Pharma and increase costs for the American people,” said Julie Chávez Rodríguez, the president’s campaign manager, referring to Republicans loyal to former President Donald J. Trump.She said the choice in the election was between Mr. Biden and “a slate of candidates focused on extreme policies that put their wealthy donors first.”Robert Jimison More