THE GRUMPY ECONOMY

Why Americans trust feelings more than facts when it comes to prosperity

- ROGE KARMA

What was the worst moment for the American economy in the past half-century? You might think it was the last wheezing months of the 1970s, when oil prices more than doubled, inflation reached double digits, and the U.S. sank into its second recession of the decade. Or the 2008 financial collapse and Great Recession. Or perhaps it was when COVID hit and millions of people abruptly lost their job. All good guesses and all wrong, if surveys of the American public are to be believed. According to the University of Michigan Surveys of Consumers, the most widely cited measure of consumer sentiment, that moment was actually June 2022.

Inflation hit 9 percent that month, and no one knew if it would go higher still. A recession seemed imminent. Objectively, it’s hard to claim that the economy was in worse shape that month than it had been at those other cataclysmic times. But substantial pessimism was nonetheless explicable.

Over the next 18 months, however, the economy improved rapidly, and in nearly every way: Inflation plummeted to near its pre-pandemic level, unemployment reached historic lows, GDP boomed, and wages rose. The turnaround, by most standard economic measures, was unprecedented. Yet the American people continued to give the economy the kind of approval ratings traditionally reserved for used-car salesmen. Last June, the White House launched a campaign to celebrate “Bidenomics”— the administration’s strong job-creation record and big investments in manufacturing and clean energy. The effort flopped so badly that, within months, Democrats were begging the president to abandon it altogether.