The NPR Politics Podcast - If The Economy Is So Good, Why Are People So Mad?

Episode Date: August 16, 2023

Inflation is way down, the U.S. is faring better than other major economies, and people broadly say their own personal financial situation is good. So why are people so down on the economy?This episode: voting correspondent Miles Parks, White House correspondent Tamara Keith, and chief economics correspondent Scott Horsley.The podcast is produced by Elena Moore and Casey Morell. Our editor is Eric McDaniel. Our executive producer is Muthoni Muturi. Unlock access to this and other bonus content by supporting The NPR Politics Podcast+. Sign up via Apple Podcasts or at plus.npr.org. Connect:Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Subscribe to the NPR Politics Newsletter.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hey there, it's the NPR Politics Podcast. I'm Miles Parks. I cover voting. I'm Tamara Keith. I cover the White House. And we've got a very special guest today, NPR's Scott Horsley. Hi, Scott. Great to be with y'all. So we wanted to talk about the economy because there's a lot of really interesting data coming out that seems to be kind of building towards a contradiction for President Biden. On the one hand, inflation seems to be cooling. On the other hand, it is really hard to convince voters that things are looking good. Inflation continues to moderate. Prices in July were up 3.2 percent from a year ago. That's a big improvement from last summer when inflation was topping 9%. The details in the report suggest that core prices are continuing to approach where they want to be.

Inflation is still higher than the Fed's 2% target, but it's certainly moving in the right direction. And it's better than inflation in a lot of other countries. It's still up around 8% in the U.K. It's 5.5% in the rest of Europe. So the U.S. has seen inflation fall faster than a lot of other countries. And at the same time, the job market has held up pretty well. U.S. employers added 187,000 jobs in July. So it's looking as if the Fed may achieve that elusive soft landing where we get inflation under control without tipping the economy into recession. It seems like this remarkable thing where for months and months and months, many forecasters, many people were saying,

we see a recession around the corner, we see a recession around the corner, and it's like a switch flipped. And now everybody's saying, we no longer see a recession around the corner. Yeah, I mean, we're not completely out of the woods, but it's certainly looking as if the path to a soft landing is wider than it appeared maybe six months ago. And trends are generally moving in the right direction. Now, from the president's point of view, one not so positive sign is what's happening at the gas pump. Gasoline prices have jumped rather sharply in the last month or so. They're about 30 cents a gallon. And we've talked about this before. People put a lot of weight on gas prices, even if they're not a huge portion of

the average family's budget. You know, those signs at the corner gas station are two feet tall, and that carries a lot of psychological weight. But even with that run-up in gas prices, the University of Michigan's consumer sentiment numbers show people feeling a little better about the economy. So all the indicators are pretty good except the president's approval rating. Yeah. Tam, how is the administration feeling about all of this economic data that it hasn't exactly translated this year into voters saying, wow, President Biden did it? The idea that the soft landing is even possible or potentially probable at this point feels like it should have translated to voters, but it hasn't really yet. They are expressing patience that they think that it it's sort of sentiment.

It can be lagging or credit can be lagging. And so they seem to be willing to give it more time because they, in fact, have more time. And, you know, they see the next year as their chance to sell Bidenomics to the American people as a thing that has succeeded and shouldn't be a derogatory term. So they are willing to give it time. And certainly the president has been voicing this. Everybody said it was going to be a recession and it's not. So look at this. Or everybody made fun of Bidenomics. But now he's got a little bit of a chip on his shoulder about it, as he often does. All right. Well, let's take a quick bit of a chip on his shoulder about it, as he often does.

All right. Well, let's take a quick break. We'll be right back. Hey there, I'm Casey Murrell, a producer on the NPR Politics Podcast, with a quick plug for our most recent bonus episode that's available now. This one, it's a fun behind-the-scenes chat on how we check the facts each and every day on the show. And it's not just about getting names and numbers right. What was a goat doing at the rodeo in the first place? Apparently, like, goats are a pretty, like, standard part of a rodeo event. All that and more in our latest bonus episode for NPR Politics Plus listeners, whose support helps make this show possible. Subscribe now, plus.npr.org slash politics. And we're back. We know that everyone has their kind of individual economy, right? And one of the

data points that I've been really interested by the last couple of weeks is the huge rise in credit card debt. So we've got kind of broader, rosier pictures being painted, but isn't credit card debt at like an all-time high right now? Yeah, we got some numbers from the New York Fed that showed that credit card balances in June topped a trillion dollars for the first time ever. That is, if you add up all the credit card balances that people are carrying around the country, it was just north of a trillion dollars. Now, that's not a big deal for the more than half of credit card users who pay that off every month. For them, it's just a convenience. It's a way to not have to carry cash, and maybe they even get some rewards points for it.

But for the almost half who do carry a balance from month to month, that's very expensive credit. The average interest rate on credit cards is above 20% now. So if you're just paying the minimum and carrying a balance from month to month, that's costly. Now, the good news is in the last few months, we've seen wages outstrip inflation. So people's real buying power has actually increased in recent months. That was not the case for a long time when prices were going up faster than people's paychecks. And that's one reason people were relying on credit cards to make up that difference. But now we are seeing a real buying power grow. And so there's at least the potential for people to maybe pay down some of that debt and avoid those interest expenses if they can do so. Of course, the government's own credit card is carrying a pretty big balance right

now too. And the taxpayers are going to be on the hook for the larger interest payments associated with that as well. To go back to the question that we sort of topped the conversation with, I think about this a lot, the perception of the economy broadly versus people's perception of their own economy or their own economic state. And Scott, you probably have the numbers spelled out, but consistently people are saying, I don't feel great about the economy. And yet I'm doing fine. I'm doing better. I expect to be doing better six months from now than I'm doing now. There's a certain optimism at the individual level that isn't reflected more broadly. And there's a sense where basically almost all of our data is broken, where presidential approval,

approval of the president's handling of the economy, approval of the president's handling of the environment, approval of basically anything isn't really about how people actually feel about the economy. It's just how they feel about the president. Yeah, we know that, you know, people view the economy writ large through very partisan lenses now. So Democrats tend to be more optimistic about the economy than independents and Republicans. It was the opposite during the Trump administration. And when the administration changes, you know, people's partisan lenses change, and they don't necessarily recognize that. But it's certainly true that people's, you know, perception of the economy and who gets credit or blame is very much shaped by bipartisan viewpoints.

By any objective measure, though, the economy is doing reasonably well. We saw the GDP grow 2.4% in the springtime quarter, which is better than a lot of forecasters would have expected early in the year. Consumer spending has been pretty strong. We've added a ton of jobs. Real incomes are once again rising. And even with that large credit card debt, we're not seeing a lot of defaults on credit cards. People still have a little bit of a cash cushion they built up early in the pandemic, so there's a little bit of a safety measure there. Won't last forever, to be sure, but we're not seeing a lot of real signs of economic distress.

Tam, to close it out, I mean, where are you at with thinking how much the economy is going to affect 2024? I mean, is this going to be a top of the ticket thing for how people are voting? Or do you see it as being a little less important than, say, I don't know, whether President Trump is, you know, in court every other day. Right. I think that it's hard to predict what the most important thing will be in this election. But, you know, cycle after cycle, we think that the economy is going to be the top issue. And people say the economy is a top issue.

And yet generally, it's something else. It's about personality. And certainly there's going to be some personality likely on the ballot this time around, to say the least. And you can't underestimate the power of the issue of abortion, which in some states may explicitly be on the ballot, but is certainly going to be a huge part of the conversation. I guess what I'm saying is there's still time. People do care about the economy, but it's not clear that they vote on the economy. Yeah, I feel like that could change if gas prices are like six dollars a gallon or something like that. Right. But if we're in an environment where things aren't extreme, then

maybe it's possible that some of these other issues could take precedent. Right. And I'm thinking about 2012 when voters had a pretty dim view of the economy still because the recovery from the Great Recession was slower than everyone wanted. And Mitt Romney was a former businessman running.

Barack Obama still won, even though Mitt Romney rated better on the economy. NPR's Scott Horsley, thank you so much for joining us. Always good to be with you. I'm Miles Parks. I cover voting. And I'm Tamara Keith. I cover the White House. And thank you for listening to the NPR Politics Podcast.