“Why are the vibes so bad?” ask legions of commentators, noting the disconnect between polling on the economy and top-level economic indicators. The unemployment rate is within spitting distance of 60-year lows, and measured inflation has dropped from a punishingly high 9 percent rate to a lower, though still too high, 3.2 percent.
And yet, citizens are unhappy with the economy. According to a New York Times–Siena poll, 81 percent of registered voters described the condition of the economy as fair or poor, and only 19 percent called it good or excellent. Another poll, conducted by the Financial Times and the University of Michigan, found that a majority of voters said that they are worse off under President Biden then they were before, and only 14 percent said that they are better off. By a 59 percent to 37 percent margin, the Times–Siena poll found voters trusting Donald Trump more than President Biden on the economy.
To reconcile voters’ discontent with the economic data, we shouldn’t consider the top-level employment and inflation indicators separately. Instead, we should combine them—and when we do, we observe workers’ real (that is, after inflation) wages…
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