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.
Unemployment has been below 4% for two years, despite the recently high inflation figures. The U.S. economy added 216,000 jobs in December 2023, beating forecasts.
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.
Research roundup
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.