The most recent Harris-Guardian poll found 56 percent of those surveyed thought the US was in a recession. And 49 percent believed unemployment was at a 50-year high.
How is that possible when the economic facts are exactly the opposite? Unemployment is at a 50-year low, and there hasn’t been a recession since the short-lived 2-month COVID-19 recession in March-April 2020.
The Harris poll said:
· 55% believe the economy is shrinking, and 56% think the US is experiencing a recession, though the broadest measure of the economy, gross domestic product (GDP), has been growing.
· 49% believe the S&P 500 stock market index is down for the year, though the index went up about 24% in 2023 and is up more than 12% this year.
· 49% believe that unemployment is at a 50-year high, though the unemployment rate has been under 4%, a near 50-year low.
"What Americans are saying in this data is: ‘Economists may say things are getting better, but we're not feeling it where I live,'” said John Gerzema, CEO of the Harris Poll. “Unwinding four years of uncertainty takes time. Leaders have to understand this and bring the public along.”
There may be a lot of confusion over what exactly defines a recession, but I believe there’s a better explanation for the pervading pessimism among those surveyed. Many polls have found that most Americans do in fact feel good about their own financial circumstances, but not so good about where the US economy is heading.
Then what must those surveyed compare today’s economy to, since public news reports document that the US has recovered the quickest from the pandemic with the fastest growing economy among developed countries in the world?
Maybe they remember the pre-pandemic economy of the prior decade when both the unemployment and inflation rates (see cpi graph) were at or below 3 percent. It was a goldilocks time, while choosing to forget the severe trauma from two years of lockdowns that began in 2020 with images of refrigerator trucks lined up in the larger cities to hold many of the one million dead that mortuaries couldn’t hold.
Such a collective amnesia has happened before, more than 100 years ago during the Spanish flu pandemic. The Roaring Twenties excess that followed may have helped to erase those horrific memories when more than 675,000 died, say historians.
A Smithsonian Magazine article highlights some of the Roaring Twenties’ history of the 1920s that could confirm my thesis.
The Smithsonian article mentions Harper’s editor Frederick Lewis Allen’s 1931 account of the previous decade, Only Yesterday. Allen labels the Twenties as the “post-war decade” (of World War One) and mentions the pandemic a grand total of once.
“My guess is it did not sit with the story that Americans tell about themselves in public. It’s not the story that they want to put in fifth-grade U.S. history textbooks, which is about us being born perfect and always getting better,” says Bristow, who wrote American Pandemic: The Lost Worlds of the 1918 Influenza Epidemic.
“Americans believed themselves “on the verge of putting infections disease to rest forever,” she explains, and instead, “We couldn’t do anything more about it than anybody else.” Indeed, President Woodrow Wilson, who held the office throughout the multi-year pandemic, never once mentioned it in his public comments,” said Allen.
The Smithsonian also cites Yale sociologist and physician Nicholas Christakis who hypothesizes that the 1918 pandemic falls into an ages-old pandemic pattern, one that our Covid-19 present may mimic, too.
In his 2020 book, Apollo’s Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live, he argues that increasing religiosity, risk aversion and financial saving characterize times of widespread illness. Christakis expects the Covid-19 crisis to have a long tail, in terms of case numbers and social and economic impacts.
“People are going to want to make sense of what happened,” he says, positing that “we’ll likely see an efflorescence of the arts” post-pandemic. That’s not to say our A.C. (After Covid-19) reality will be all rosy. “We’ll be living in a changed world.”
A majority of Americans polled also believe Republicans are better stewards of their wealth. Yet the COVID-19 pandemic occurred during the Trump administration, and its one million death toll might have been lower if Trump hadn’t denigrated scientists and encouraged anti-mask and anti-vaccine doubts among his followers.
Certainly many Republicans might then want to dwell on the years just before the pandemic and erase their memories of the ineptness of the Trump administration when their President suggested injecting chlorine into their veins as a cure.
My thesis is up for discussion as are all theses, of course. I welcome comments on what is still a puzzle to most economists. How can opinions differ so much from public facts? Maybe lasting memories of a more peaceful decade still dominate over our vastly changed, post-pandemic world?
Harlan Green © 2024
Harlan Green on Twitter: https://twitter.com/HarlanGreen
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