Why are Americans so frustrated with the economy? Lael Brainard, a National Economic Council Director, speaks to All Things Considered
New figures show unemployment is down to 3.7%, and it’s been under 4% for nearly two years now. Employers also added 199,000 jobs last month and wages keep rising. So why do so many Americans have a pessimistic view of the economy? Gallup’s recent economic confidence poll shows that nearly three quarters of Americans think the economy is getting worse.
Lael Brainard, the Director of the national economic council, spoke with All Things Considered on Friday about why inflation is still an issue, and what the numbers show.
Lael Brainard is a person. It’s important to know how good the job market is and how many Americans are working since the president came to office. Our position a year ago is very different. forecasters thought we couldn’t get inflation down to where it is now without millions of people being unemployed, and that’s why it was very high. A lot of people still believe that too many things are too expensive.
Shapiro: You know, one interesting data point is the rate that women have returned to the workforce. During the pandemic, women left their jobs at far greater rates than men, partly because those jobs were more likely to be eliminated, and partly because women bear a disproportionate child care burden. The percentage of American woman in the workforce hit a record high this year. Why do you think the rebound has been so dramatic?
Shapiro: So despite the strong job market and rising wages and falling inflation, Americans do not think the economy is good. Almost every single month of Biden’s time in office, a majority of the respondents told Gallup that they think the economy is getting worse. How do you account for this disconnect?
Brainard: Well, while the jobs picture is very bright, we know that many Americans are worried that some things are not affordable. And that’s why the president is so focused on fighting to bring down costs for hard working Americans. The president believes prescription drugs are too expensive for many Americans, which is why he is trying to lower health care costs. He got great legislation to cap insulin costs for seniors at $35 a month. That’s $400 cheaper for many. We will be capping out-of-pocket costs for seniors at $2,000 per year. And Medicare has the authority now to negotiate prices, starting with 10 drugs next year.
The man is named Shapiro. Do you think that the economy is getting worse because of something likeinsulin prices, when three quarters of Americans tell Gallup it is? I mean, the question seems to be broader than that, and I would think the answer comes from a sentiment that’s broader than that.
Brainard: We saw a big jump in consumer sentiment this morning in the Michigan survey. Consumers are very focused on the costs that matter to them. It’s an affordability issue for so many Americans. But consumers are also tired of being hit by hidden fees. That’s why we’re cracking down on junk fees in everything from airline ticketing to credit cards to overdraft fees. Corporations must be passing on the savings from supply chains and input cost reductions to consumers now that they have them. And we think that will go a long way to continuing that increase in consumer sentiment that we saw today.
The Economy Is a Problem Spot: The Decline in Our Views of the ECONOMIC Solves More Than Expected
It was yet another strong jobs report Friday, exceeding expectations. The unemployment rate fell to 3.7% last month after almost 200,000 jobs were created.
People are also spending at a record rate this holiday shopping season — 200 million people shopped between Thanksgiving and Cyber Monday, higher than expectations and the most ever.
Inflation, which has led to higher grocery and gas bills than Americans would like, is partially to blame for souring their moods. But there’s more going on here.
Democrats have also Declined in Their VIEWS OF THE ECONOMIC does show that it’s not all about politics, while Republicans have had sharper changes in economic outlook and a lot of that may be politics.
According to the Pew Research Center, only 18% of Republicans thought that the economy was either good or excellent during the time that Barack Obama was in office.
The unemployment rate was only 4.7% by the time Barack Obama left office, but the economy was still recovering from the Great Recession. It was a decline to be sure but not to the extent that would explain Republicans’ 63 point increase under Trump when inflation was flat.
People can see it on signs at gas stations and on their groceries as well as on massive signs at stores. The June of last year saw overall inflation hit a high of 9.1%, which was the second highest in the country. Food inflation was higher during the summer last year.
Steak, bacon, eggs, cheese, potato chips, coffee, ice cream and cookies were more expensive because of that. They are household items that people will notice when they go to the store.
Overall inflation and food inflation have both come down significantly since the start of the year, from 6.4% overall to 3.2% in October and from 10.1% to 3.3% for food.
Food inflation has fallen sharply since the summer, but this doesn’t mean prices are going down very much, and in the latest Gallup survey 75% of people disapprove of Biden’s handling of the economy.
Housing costs in many parts of the country remain high, and one of the reasons for inflation coming down is because the Federal Reserve hiked interest rates substantially, making the ability to afford a home significantly more difficult.
Right now, Biden is vulnerable due to the fact that people feel that inflation is easing, the Fed starts to reduce rates, and the election is just a year away.
Source: The economy is a trouble spot for Biden despite strong signs. Here’s why
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