It’s a Goldilocks economy – not too hot to spur inflation, not too cool to invite recession.
On Friday, the labor department announced that the US economy added 209,000 jobs in June.
It was the 30th consecutive month of job gains. The unemployment rate dipped to 3.6%
Last Thursday we learned that the US economy grew at an annualized 2% rate in the first quarter of this year. That’s well above economists’ expectations of around 1.4%.
But if you haven’t received this news, you’re not alone. Good economic news doesn’t make it through the negative sludge of Fox News or Newsmax. It barely gets through the mainstream media.
You want some additional good news? In the four years of Donald Trump’s administration, total investment on manufacturing facilities grew by 5%. During the first two years of Biden’s administration, manufacturing investment more than doubled.
This has created about 800,000 manufacturing jobs.
These remarkable results are the outcome of Biden policies – the Inflation Reduction Act and its green technology provisions, the infrastructure bill and the Chips Act.
What about inflation? Yes, Biden’s stimulative spending did boost prices. But the big news that’s not getting through to most Americans is that inflation has been dropping. It has declined significantly from its mid-2022 highs above 9%.
Consumer prices are now rising by about 4.9% annually – still a problem but not nearly the problem it was.
Much of the remaining inflation is due to outsized corporate profit margins. The IMF recently found that almost half the increase in Europe’s inflation over the past two years is due to rising corporate profits.
I wish Biden would make an issue of those profit margins. They’re enriching those at the top while imposing a big penalty on everyone else.
And wages? For a while, real (adjusted for inflation) wages were falling, but now that inflation is subsiding, real wages are picking up again.
So why do so many Americans continue to think the economy is awful?
According to the Gallup economic confidence index, Americans haven’t felt this bad about the economy since the financial crisis of 2008 and 2009. The University of Michigan’s Consumer Sentiment Index is similarly downbeat.
In an NBC News survey conducted a few weeks ago, at least 74% of Americans said the country is on the wrong track.
Given all this, it’s not surprising that Joe Biden’s approval numbers have been stuck at around 43%.
History shows that incumbent presidents tend not to be re-elected when about 70% of Americans think the country is on the wrong track. (They tend to win when fewer than half of Americans think that.)
So, the obvious question is, why are Americans feeling so bad about an economy that’s actually damned good?
One reason, I think, is a general sense of dread – centering on Trump, DeSantis and Republican lawmakers in general – that seems to affect everything else. (I don’t know about you, but I sometimes have difficulty getting to sleep, worried about the rise of authoritarian fascism in America.)
Add in the effects of the climate crisis, and you get more gloom. (This week, the earth’s average temperature reached the highest on record.) A recent study found that headlines have grown starkly more negative.
Then, too, many of us are still suffering from pandemic-related PTSD.
But I think the deeper reason Americans don’t feel very good about the economy is that is that the vast number of working non-college grads – some two-thirds of the adult US population – are still bogged down in dead-end jobs lacking any economic security, while struggling with many costs (such as housing, childcare and education) that continue to soar.
In other words, the economy is getting better overall – but overall has become a less useful gauge of wellbeing as the rich get richer, the poor grow poorer, and the working middle is under worsening siege.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
