Paul Krugman, 2008 recipient of the Nobel Memorial Prize in Economic Sciences and New York Times columnist, wrote on Jan 9 that continued public negativity around the economy is due to MAGA’s anger that Trump isn’t president.
Mismatch
What is called the “misery index,” a combination of the unemployment and inflation rates, markedly improved over the final months of 2023. Consumer opinion typically mirrors this, Krugman explained, but as of early January it wasn’t doing so.
Confusing Pattern
The economic sentiment index, measured and published by the University of Michigan, is a calculation of consumer sentiment. In early January, it was at levels usually seen during “severe recessions, very high inflation, or both,” Krugman wrote, despite a 14% jump in December.
Similar Picture
According to Civiqs, which also calculates public opinion on the economy, nationwide sentiment was -29% net good. That’s lower than any point between Trump’s inauguration and the Coronavirus stock crash.
Extreme Sentiment
Almost 40% of the 940,000 responses to Civiqs’s poll were “very bad.” In comparison, just 8% of respondents rated the economy as “very good.”
Economic Performance
As Krugman explained, the US economy has actually been doing very well for over a year. Throughout 2023, unemployment hovered around a 50-year low and high inflation was brought under control.
Continued Job Growth
Biden has added over 400,000 jobs every month since assuming office. In comparison, Trump added about 176,000 per month in the period before the pandemic.
Unconsidered Factor
“One of the factors everyone knows is affecting consumer sentiment — partisanship — may be even more important than most economists realize,” Krugman argued. “Indeed, weak consumer sentiment may be almost entirely about MAGA.”
Different Attitudes
Krugman pointed to Civiqs data that showed a tendency among Republicans to adjust their opinions about the economy based on whether their party controlled the White House. Republican opinions about the economy generally remained sky-high throughout Trump’s presidency.
Different Realities
Even during the Covid crash, when overall consumer confidence as measured by Civiqs plunged to -61% net good, Republican opinion was only in the low -20s. Under Biden, that plunged to the -80s, and by early January was at -87% net good.
Less Partisan
Democrats, Krugman explained, were also a little less optimistic about the economy after Trump’s election. However, the difference in their opinions changed more in line with “economic fundamentals” like inflation, rather than with partisan political changes.
In the Clouds
As Krugman pointed out, some two-thirds of Republicans believe that the 2020 election was stolen. As of February 2024, no evidence has been produced to support this idea.
What This Means
Krugman concluded with two possible readings of this partisan divide. Negative opinions about the economy might not hurt Biden as much as some analysts predict, because most of those holding negative opinions were never going to vote for him anyway.
The Media
According to Brookings, in the past three years economic news has become increasingly biased towards negativity. That could also be contributing to the disparity between public opinion and economic indicators.
Lack of Knowledge
Additionally, multiple surveys have shown that the vast majority of Americans lack basic knowledge about the economy. In a Financial Times survey, for example, 90% of respondents incorrectly claimed that prices rose faster than wages in 2023.
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