The following article by Clark Merrefield is cross-posted from The Journalist’s Resource (January 12, 2024).
The U.S. economy is in good health, on the whole, according to national indicators watched closely by economists and business reporters. For example, unemployment is low and the most recent jobs report from the Bureau of Labor Statistics shows stronger than expected hiring at the end of 2023.
Yet news reports and opinion polls show many Americans are pessimistic on the economy — including in swing states that will loom large in the 2024 presidential election. Some recent polls indicate the economy is by far the most important issue heading into the election.
Journalists covering the economy in the coming months, along with the 2024 political races, can use academic research to inform their interviews with sources and provide audiences with context.
The studies featured in the roundup below explore how people filter the national economy through their personal financial circumstances — and those circumstances vary widely in the U.S. The top tenth of households by wealth are worth $7 million on average, while the bottom half are worth $51,000 on average, according to the Institute for Economic Equity at the Federal Reserve Bank of St. Louis.
We’ve also included several questions, based on the research, which you can use in interviews with policy makers and others commenting on the economy, or as a jumping off point for thinking about this topic.
The economic state of play
Toward the end of 2023, inflation was down substantially from highs reached during the latter half of 2022, according to data from the Center for Inflation Research at the Federal Reserve Bank of Cleveland.
Gross domestic product from the third quarter of 2023, the most recent available, is in line with or better than most GDP readings over the past 40 years. GDP measures the market value of all final goods and services a country produces within a given year.
The average price of a gallon of regular unleaded gasoline is nearly $3 nationally, down more than 70 cents since August 2023 (though attacks on Red Sea shipping lanes have recently driven up oil prices).
Despite these positive indicators, one-third of voters rate the economy generally, or inflation and cost of living specifically, as “the most important problem facing the country today,” according to a December 2023 poll of 1,016 registered voters conducted by the New York Times and Siena College.
The economy was the most pressing issue for voters who responded to that poll, outpacing immigration, gun policy, crime, abortion and other topics.
Crime, for example, registered only 2%, while less than 1% chose abortion as the most important problem in the country. The margin of error for the poll is +/- 3.5%, meaning there is a high probability that concerns about the economy among U.S. voters easily eclipse concerns about other issues.
Similarly, 78% of people who responded to a December 2023 Gallup poll rated current economic conditions as fair or poor. Gallup pollsters have reported similar figures since COVID-19 shutdowns began in March 2020.
Explanations and insights
The tone of news coverage is one possible explanation for the disconnect between actual economic performance and how individuals perceive it, according to a recent Brookings Institution analysis. Since 2018 — including during and after the recession sparked by COVID-19 — economic reporting has taken on an increasingly negative tone, despite economic fundamentals strengthening in recent years, the analysis finds. The Brookings authors use data from the Daily News Sentiment Index, a measure of “positive” and “negative” economic news, produced by the Federal Reserve Bank of San Francisco.
The six studies featured below offer further insights. All are based on surveys and polls, some of which the researchers conducted themselves. Several also explore economic perception in other countries.
The findings suggest:
- Economic inequality tends to lead people into thinking the economy is zero-sum, meaning one group’s economic success comes at the expense of others.
- In both wealthy and poorer countries, belief in conspiracy theories leads people to think the economy is declining — things were once OK, now they are not.
- In the U.S., political partisanship may be a more accurate predictor of economic perception than actual economic performance.
- Households at higher risk of experiencing poverty are less likely to offer a positive economic assessment, despite good macroeconomic news.
Economic Inequality Fosters the Belief That Success Is Zero-Sum
Shai Davidai. Personality and Social Psychology Bulletin, November 2023.
The study: How does economic inequality in the U.S. affect whether individuals think prosperity is zero-sum? A zero-sum outlook indicates that “the gains of the few come at the expense of the many,” writes Davidai, an assistant professor of business at Columbia University, who surveyed 3,628 U.S. residents across 10 studies to explore the relationship between inequality and zero-sum thinking.
In one study, participants answered questions about how they experience economic inequality in their personal lives. In another, participants read about the salaries of 20 employees at one of three randomly assigned hypothetical companies. The first company had a range of very low and very high salaries. The second had high salaries with little variation. The third had low salaries with little variation. Participants were then asked if they interpreted the distribution of wages as equal or unequal, as well as about their political ideology. Davidai uses several other designs across the 10 surveys.
The findings: Participants who read about the company with highly unequal salaries were more apt to report zero-sum economic beliefs. Overall, when controlling for factors including income, education and political ideology, the perception of the existence of economic inequality led to more zero-sum thinking. Davidai also suggests that while people with higher incomes may not perceive their own success as having resulted from others experiencing loss, the existence of inequality could lead them to think generally about economic gains in zero-sum terms.
The author writes: While “the belief that the rich gain at the expense of the poor helps explain why perceived inequality fosters a view of the world as unjust,” Davidai notes that “zero-sum beliefs may also have some positive implications. Since perceived inequality fosters a view of ‘the rich’ as gaining at others’ expense, it may bolster support for disparity-mitigating policies.”
Multinational Data Show that Conspiracy Beliefs are Associated with the Perception (and Reality) of Poor National Economic Performance
Matthew Hornsey, et. al. European Journal of Social Psychology, October 2022.
The study: Using survey data from 6,723 university students across 36 countries, the authors investigate the relationship between belief in conspiracy theories and negative views of current and future national economic success, measured by GDP.
Participants were from Turkey, Colombia, Nigeria, Brazil, Japan, Canada, China, France, Latvia, the United Kingdom and the U.S., among others. The same conspiracy can have different levels of meaning to people in different countries. For example, “conspiracy theories about the death of Princess Diana might have different cultural relevance in the United Kingdom than they do in China.” For this reason, the authors kept their questions high-level and asked about participants’ willingness to believe that government actors collude in a systematic way to “hide the truth” from the public.
The findings: People were more likely to believe in conspiracies in countries with relatively low GDP per capita. Conspiracy beliefs were also higher among participants who thought their nation was in poor economic health. Individual financial circumstances among participants were not related to a greater propensity to believe in conspiracies, though the authors note this finding is not generalizable, as their sample consisted of young, mostly middle-class university students. In other words, their sample was not representative of overall national demographics.
The authors write: “These relationships did not seem to be a reflection of a general disagreeable orientation; indeed, the more strongly people self-reported having conspiracy beliefs, the more positively they reported the economic performance of the country in the past. As such, those high in conspiracy belief were characterized by a sense of economic deterioration: things were good once, but not so much now and going forward.”
Evaluating the Unequal Economy: Poverty Risk, Economic Indicators, and the Perception Gap
Timothy Hellwig and Dani Marinova. Political Research Quarterly, March 2022.
The study: Broad, aggregate measures of a nation’s economic health, such as GDP, fail to capture individual economic experiences, the authors write. Instead, the authors analyze poverty risk. To do that, they examined data from 27 countries from European Union Statistics on Income and Living Conditions surveys, along with public opinion surveys. Data for each country is either from 2009 or 2014. The focus on poverty “captures not only currently experienced problems but also anticipated ones,” the authors write. The authors classify a household as at risk of experiencing poverty if its members were relatively less likely to say that the economy improved over the past year.
The findings: The authors take the position that “poverty risk serves as a filter for macroeconomic information.” For those with no risk of experiencing poverty, strong GDP performance means an overall rosy economic outlook. But those at a higher risk of poverty are less likely to offer a positive assessment of an economy, despite good macroeconomic news, such as GDP growth or low unemployment numbers. Aggregate national data points are “far removed from their daily struggles,” as the authors put it.
The authors write: “We further show that those at risk of poverty know less about economic performance by standard economic indicators but offer more accurate estimates of national poverty rates. These novel findings underline the need to depart from familiar indicators and address how unequal economies structure preferences and policy responses.”
Perception of Economic Inequality Weakens Americans’ Beliefs in Both Upward and Downward Socioeconomic Mobility
Alexander Browman, Mesmin Destin and David Miele. Asian Journal of Social Psychology, March 2022.
The study: Economic mobility works both ways. It can mean moving up the economic ladder or moving down. The authors explore the relationship between strong beliefs that personal financial health in the U.S is unequal, with a small number of people holding disproportionate wealth, and whether stratified economic classes are unlikely to shift. The authors conducted three online surveys, not representative of national demographics, among 618 U.S. adults in 2018 and 2020.
The findings: Participants who strongly believed that a small number of individuals hold most of the wealth in the U.S. were more likely to also believe that the rich would stay rich while people with low income were unlikely to climb the economic ladder.
The researchers also found that Americans’ perceptions of inequality may be becoming more accurate — the participants in the 2020 study more accurately estimated the wealth held by the nation’s richest 20%, compared with participants in the surveys conducted two years prior.
The authors write: “[Participants] believed that social class groups in their country were largely ossified and impermeable, and thus that Americans were unlikely to move out of the groups they were born into.”
Cognitive Political Economy: A Growing Partisan Divide in Economic Perceptions
David Brady, John Ferejohn and Brett Parker. American Politics Research, January 2022.
The study: The authors explore what they call a “puzzling” gap in political research: how being a Democrat or Republican might affect people’s perception of whether the national economy is doing well or poorly. Namely, the paper aims to reveal whether the difference in partisan perception has widened across more than two decades, as well as the root causes of any change. The authors examine results from 234 monthly Gallup polls conducted between 1999 and 2020 to see how people responded to Gallup’s ongoing question asking whether the economy is getting better or worse.
The findings: By the end of the period studied, both Democrats and Republicans were more likely to have a dim view of the economy when a president of the opposing party was in office, compared with the beginning of the period studied. The authors observe the biggest gap in September 2020. At that time — roughly six months after widespread COVID-19 shutdowns began — 78% of Republicans thought the economy was getting better, compared with 5% of Democrats. Democrats and Republicans were most closely in agreement on how the economy was doing in January 2009, when only 17% of participants from either party thought the economy was on an upswing, a reflection of the recession happening at the time.
Democrats were more optimistic about the economy when a Democrat was president and the same was true for Republicans during Republican administrations. Independents were not swayed by the party holding the presidency. There were two recessions during the period studied. The authors find that data about the economy is only relevant to economic perceptions during the recessions, “otherwise, individuals are largely content to rely on their partisan affiliation.”
The authors write: “Whatever the role of economic factors in partisan economic perceptions, it is nevertheless clear that political variables are of primary importance. Moreover, it appears the influence of those variables is becoming more pervasive.”
Economic Self-Interest and Americans’ Redistributive, Class, and Racial Attitudes: The Case of Economic Insecurity
Cody Melcher. Political Behavior, March 2021.
The study: Melcher, a sociologist at Loyola University New Orleans, uses the 2016 American National Election Studies survey of more than 4,000 U.S. adults to examine how they perceive their personal economic health, currently and over the coming year. He then examines how these economic perceptions affect participants’ social and political views.
The findings: Respondents worried about experiencing economic hardship in the future tended to have a negative attitude toward powerful and rich business entities. The same negative attitude toward big business was expressed by people expecting to become unemployed during the coming year. Those with high anxiety over facing general economic hardship were also more likely to agree that the federal government should enact policies aimed at improving employment. Those specifically expecting job loss were less likely to perceive the U.S. as a country that, broadly, offers economic opportunities. They also were more likely to align with “the perception that ‘many whites are unable to find a job because employers are hiring minorities instead.’”
The author writes: “The evidence presented here makes it clear that existing measures and conceptualizations of economic self-interest — and the body of empirical work that discounts economic factors in American public opinion — need to be rethought in light of economic insecurity.”
Questions for sources
Here are some questions you may find worth asking sources, based on this research:
- For people with lower levels of income, do they see the economic gains for some corresponding to others losing out? Or, do they interpret the economy as an ever-expanding pie, able to accommodate all who have the ability and desire to profit? The answers may help explain individual rationales behind perceptions of national economic performance.
- Among people who believe in conspiracies, did that belief coincide with a personal economic shock — for example, job loss or a major medical expense?
- Are people able to reflect on the specific reasons they think the economy is doing well when a president of their same political party is in office? For people who have voted in several presidential elections, do they feel they are now less likely than in the past to think the economy would be in good hands under a president of the opposing party?