Bank of America published a briefing on Oct. 27 with the headline, “The good times won’t last forever.”
The typical American must wonder what “good times” the bank could possibly be talking about.
B of A was referring to the remarkable jump in economic output for the third quarter, which ended in September. Government data showed a giant 4.9% gain in real GDP, adjusted for inflation, from the second quarter to the third. That’s not unprecedented, but it’s about twice the norm during ordinary times, when the economy is growing.
It’s worth recalling that six or nine or 12 months ago, many economists thought we’d be in a recession by now. We’re not even close. Consumers are still spending. “Excess savings” that consumers piled up during the COVID downturn were supposed to run out, but shoppers, somehow, still have gas in the tank. Even housing, depressed of late by surging interest rates, is showing signs of life.
Americans must be celebrating their own financial resilience, right? Bahaha! No! Misery rules! Everything sucks!
Confidence levels fell in the University of Michigan’s latest consumer sentiment survey, continuing a string of surprisingly dismal readouts on consumer attitudes. Confidence is similar to levels during the Great Recession, when the value of stock portfolios and homes was plunging and millions of workers were losing their jobs. Confidence now is considerably worse than in April 2020, when COVID was metastasizing, thousands were dying every day, and much of the nation went into an open-ended shutdown. Other confidence measures show roughly the same levels of despondency.
To many economists, this makes no sense, given that the unemployment rate is a super low 3.8%. Everybody knows what is spoiling the party: inflation. Even so, the inflation rate has dropped sharply from a high of 9% in 2022 to 3.7% now. Yet confidence has worsened for three months in a row, as if inflation is getting worse, not better.
Consumers are allowed to feel bummed out for whatever reason they want. Pollsters and economists try to figure out what’s on their minds, but sometimes they get it wrong. It’s possible and perhaps likely that the ghastly Oct. 7 Hamas terrorist attacks on Israel put everybody in a foul mood. Hostilities in the Middle East now seem to be intensifying, rather than easing. Worldwide bummer.
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But President Biden can’t get a break during peacetime, or wartime. He’s earned solid marks for his handling of the Israel-Hamas war, so far. But his weak approval rating, stuck around 40%, hasn’t budged. While addressing public concerns about the Middle East war, Biden continues to talk up the things going right in the economy, with seemingly zero ability to shake Americans from their zombie-like gloom.
After the blockbuster GDP numbers came out, Biden posted on his social media accounts a simple chart showing that “GDP skyrockets under Bidenomics.” The White House sends reporters regular memos touting “Bidenomics in action.” The basic message: Inflation is down, the job market remains strong, and predictions of a recession keep turning out wrong.
It’s all true. And yet. Voters either don’t believe it, or won’t believe it, or think it won’t last. Or they’ve dropped into a parallel universe where the skies are stormy even when the sun is out and the only thing that could be worse than today is tomorrow.
A little-known member of Congress named Dean Phillips said on Oct. 27 that he plans to run against Biden in next year’s presidential primaries. Phillips applauds Biden’s record and says he agrees with Biden on mostly everything. But he also says he’s worried about Biden’s poor traction in the polls, which might be signaling the limits of an 80-year-old president’s ability to connect with voters who are almost all younger than him.
Phillips won’t win. But an incumbent president shouldn’t be drawing challengers from the middle of his own party, either. If great economic news won’t sway voters, it’s hard to know what will.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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