Watching the Democratic candidate debates last week, one would think the US economy was an unmitigated disaster:
“Who is this economy really working for? It's doing great for a thinner and thinner slice at the top. It's doing great for giant drug companies…It's doing great for people who want to invest in private prisons…It's doing great for giant oil companies that want to drill everywhere, just not for the rest of us who are watching climate change bear down upon us. When you've got a government, when you've got an economy that does great for those with money and isn't doing great for everyone else, that is corruption, pure and simple.” Elizabeth Warren, quoted in Full transcript: 2019 Democratic Debate Night One Jeremia Kimelman/NBC News June 26, 2019
“I see every single day that this economy is not working for average Americans. The indicators that are being used, from GDP to Wall Street's rankings, is not helping people in my community. It is about time that we have an economy that works for everybody, not just the wealthiest in our nation.” Cory Booker, quoted in Full transcript: 2019 Democratic Debate Night One Jeremia Kimelman/NBC News June 26, 2019
But what do the American people think? Mostly that the US economy is doing just fine. Let’s start with small businesses, of which there are over 30 million in the US:
Ok, small businesses are feeling pretty good about their economic prospects. How about American consumers? Luckily, I have a chart for that too, thanks to the University of Michigan Survey Research Center Institute for Social Research, which conducts a monthly survey covering three broad areas of consumer sentiment: personal finances, business conditions, and buying conditions. Here are the latest results:
So across broad income groups, American consumers have been increasingly upbeat about their personal finances, business conditions, and buying conditions. And guess what? Consumer sentiment is not “merely subjective” but tethered to reality. What survey respondents think and feel about the US economy has shown a close correspondence with actual developments in the national economy. For instance, they have generally anticipated actual changes in the US unemployment rate.
One reason consumers remain optimistic about their personal finances and the state of the economy is that their personal situations have been improving for quite some time:
In case anyone thinks the University of Michigan surveys have some sort of positive bias, other surveys tell the same story. This, for instance, from Gallup:
When Elizabeth Warren and Cory Booker say the US economy is only working for big corporations and the very rich, they sound like crisis-mongers, manufacturing an economic emergency to justify questionable policy proposals. Yes, the US needs universal healthcare insurance, affordable housing, education reform, and better safety net programs. But in crafting solutions to our very real problems, you don’t throw out what’s working - you build on it. If a candidate can’t identify the strengths of the US economic system, I wouldn’t trust them to develop policies to address its weaknesses.