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By many, if not all, conventional measures, the American economy is booming. The unemployment rate is down. The stock market is up. And with Covid case rates having fallen to less than half of their September peak, employers are hiring more workers than they have in months.

The American mood, however, is bleak. According to the University of Michigan index of consumer sentiment, Americans haven’t felt this bad about the economy since the first half of 2020, when the coronavirus plunged the country into isolation and recession. In a Gallup poll in October, 68 percent of respondents said they thought economic conditions were getting worse.

Why are Americans feeling so down on the economy, and what are some reasons for optimism? Here’s what people are saying.

Why the ‘Roaring 2020s’ are off to a whimper

The supply chain is still broken. The arrival of the coronavirus in the United States last year caused people to shift their spending from services to goods at the same time as it disrupted the way those goods moved around the world.

More than a year and a half later, businesses are still struggling to keep up with factory shutdowns, jammed ports, a shortage of truckers and a surge in demand for imported products. It now takes 76 days for deliveries from Chinese factories to make it to American warehouses, up from 43 days two years ago, The Times’s Ana Swanson reports. American factories have also had to curb their output for lack of components like resins, computer chips and filters. As a result, many products — including drugs, new cars and medical equipment — remain in short supply.

“The bad news is that the world’s supply chain problems are more persistent and more severe than previously realized,” Tyler Cowen, a professor of economics at George Mason University, writes at Bloomberg. “The worse news is that there is no single reason why, and therefore no straightforward fix.”

Things keep getting more expensive. In large part because of the snarled supply chain, consumer prices in October were up 6.2 percent from a year earlier, the largest annual increase in 30 years. “Americans are paying more for dinner, fuel and housing,” DealBook reports. “Hopes that a spike in prices would quickly fade — that pandemic-induced inflation would be ‘transitory,’ to use the economic lingo — are being challenged by rising prices for a wide range of items: Meat rose by nearly 13 percent in the year to September, gasoline was up 42 percent and rent rose by more than 3 percent (double the rate six months ago).”

Wages have also been on the rise, but in many industries, those gains haven’t kept up with inflation.

Inflation is uniquely bad for morale. As the Times columnist Paul Krugman points out, most Americans are actually feeling pretty good about their own financial situation. Their negative outlook is general, stemming from a feeling that bad things are happening to other people. Where does that feeling come from? Krugman blames news organizations — particularly those antagonistic to the Biden administration, like Fox News and Newsmax — that “have been doing all they can to convey the impression of a troubled economy, whatever the reality.”

But inflation also seems to have a naturally depressive effect on the public mood, as The Times’s Neil Irwin explains. He cites the work of the Nobel Prize-winning economist Robert J. Shiller, who in the 1990s conducted surveys to try to understand why even moderate inflation frustrated citizens so much more than economic theory suggested it should. The idea of inflation, Shiller found, evokes “arbitrary injustice, arbitrary redistributions and social bitterness,” as well as “memories of social situations in which morale and a sense of cooperation were lost.”

“That may be what makes the inflation surge such a tricky policy problem,” Irwin writes. “It can be about something more profound than dollars in people’s pockets and the price of a gallon of gas.”

The economic pain could get worse in the coming months.

  • The prices of natural gas and crude oil, which together heat more than half of U.S. homes, have soared by “eye-popping levels,” The Times’s Talmon Joseph Smith reports. So when the heating bills start coming in December and January, “the public’s going to get angry,” Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, told him.

  • Supply chain experts have been warning that shortages could deepen as the country heads into the holiday shopping season, “which could further clog backed-up ports and understaffed trucking routes,” The Times’s Jeanna Smialek reports.

Why morale could improve

The economy really is recovering. In April 2020, as the pandemic cast the economy into crisis, the unemployment rate reached 14.7 percent — the highest level since the Great Depression. But by last month, the unemployment rate had fallen to a much healthier 4.6 percent.

As a result of the tighter labor market, workers are enjoying more leverage than they’ve had in decades. “For the last 25, maybe 30 years, labor has been on its back heels and losing its share of the economic pie,” said Mark Zandi, the chief economist at Moody’s Analytics. “But that dynamic is now shifting.”

Supply chain issues could ease sooner rather than later. No one really knows when the “everything shortage” will end. “We’ve been looking at no relief coming until the end of the 2022 calendar year,” Sarah Banks, the global lead for freight and logistics at consulting firm Accenture, told The Wall Street Journal. But, she added, “it’s still a guess how long we will be in this situation.”

Some think relief is closer on the horizon. In an interview with Bloomberg, Malcolm Wilson, the chief executive of the world’s largest contract logistics provider, said that the company is seeing more goods arrive at its facilities — a sign that kinks in the supply chain are beginning to work themselves out. “We’re through the worst of it. I think we’ve reached the peak,” he said. “Hopefully, things will look a bit smoother as we move forward.”

Inflation can be brought back down. Economists say that resolving supply chain issues should help to relieve the upward pressure the shortages are putting on prices. “For things like used cars, prices are flexible in both directions,” said David Mericle, Goldman Sachs Research’s chief U.S. economist. “And once you can actually get your hands on a new car, no one is going to pay the same price for a used car as for a new car, as they are now.”

He predicts inflation will come down sharply in the middle of next year and reach 2.15 percent — within range of the Federal Reserve’s target — by year-end.

Inflation doesn’t tell the whole story. While many Americans are paying more than they were a year or two ago, the economist Claudia Sahm argues that looking at inflation alone risks obscuring the positive role that federal relief has played over the pandemic. In part because of interventions like the child tax credit, enhanced unemployment benefits and stimulus payments, Americans have accumulated $2.3 trillion more in savings in the past 19 months than would have been expected in the prepandemic path.

“We should be cautious when using the spending of specific families to drive conversations about inflation,” Sahm writes in her newsletter. “No one likes to pay more for something at the store, but if you have more income too, it’s not a problem that’s getting worse.”

The pandemic will end. Much of the recent economic turmoil started with the pandemic, and much of it could end with the pandemic too. But while Covid cases have indeed fallen since the summer, more than 1,200 Americans are still dying of the disease every day. “The most important thing to watch if you want to understand the economy is, as has been the case for a year and half now, the progress made against the virus,” Austan Goolsbee, a professor of economics at the University of Chicago, writes in The Times.

“My view is that reversals of longstanding economic trends are not likely to become permanent,” he adds. “Once the economic memory of the pandemic has faded, the old lessons from the regular business cycle will probably become relevant once more. Until that happens, though, best to get in line for a vaccine booster and keep your eye on the case numbers.”

Do you have a point of view we missed? Email us at debatable@nytimes.com. Please note your name, age and location in your response, which may be included in the next newsletter.


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“Trapped in a Pandemic Funk: Millions of Americans Can’t Shake a Gloomy Outlook” [The New York Times]