It’s The Economy, Stupid, But That Depends on Your Definition of “Economy”

The “vibes vs economic theory” discourse is in full swing, with too many hiding behind nomenclature to avoid the human factors involved.

Andrew Donaldson

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Graphic by Charles A.S. Hall, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

In the New York Times, Nate Cohn delves into the ongoing debate over how folks feel about the economy, how the economy is doing on paper, how the economy is doing in real life, and how politics is both affected by and filters those things. After breaking down the “case for vibes” verses “the case for the economy explaining all” Cohen concludes and looks ahead thusly:

New Your Times:

After a few months of stubborn inflation, rising gas prices and interest rates, and a falling stock market, the last month or so has brought excellent economic news. The stock market has gone up nearly 15 percent since New York Times/Siena College polls were in the field in late October. The inflation trajectory looks good. Mortgage rates are falling. Gas prices are down. Once-skeptical economists have declared that a “soft landing” seems at hand. And now the Fed is forecasting rate cuts, which augurs growth, confidence in lower inflation and eventually a return to a more normal economy.

Put it together, and the big economic barriers could be poised to fade. If they do and the material economic side of the debate is correct, consumer confidence might quickly begin to recover. And Mr. Biden’s re-election chances would begin to improve, at least to the extent that the economy and not another issue, like his age, is responsible for Donald J. Trump’s lead in the polls.

While it’s too early to say, there are certainly signs that consumer confidence could rise. For one, it has already been doing so. Overall, consumer confidence is up nearly 20 points since inflation peaked in the summer of 2022. That rate of improvement is in line with prior, vigorous periods of economic expansion, like during the 1990s. The monthly pattern in consumer confidence even seems to align with the news: Last month’s strong economic data corresponded with a rebound in consumer confidence that erased the declines of the past four months, when the economic news was worse than over the summer.

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Andrew Donaldson

Writer. Mountaineer diaspora. Veteran. Managing Editor @ordinarytimemag on culture & politics, food writing @yonderandhome, Host @heardtellshow & other media