EuroWire July 2016

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July 2016 26
The USA economy
Optimistic economists and pessimistic
voters: a strange disconnect in a
presidential election year in America
“The 2016 presidential campaign has exposed worries among
many voters about a US in decline. The sentiment played a
particular role in boosting the candidacy of businessman Donald
Trump, with [his] campaign slogan pledging to ‘Make America
Great Again.’”
Josh Zumbrun – a national economics correspondent for the
Wall Street Journal in Washington, DC – went on to consider
another feature of the current USA political season.
The WSJ monthly survey of 70 business, academic and nancial
economists, conducted 6th to 10th May, had posed the question
whether living standards were higher today or at various points
in the past. Some 80 per cent said these standards are higher
today than during the 1990s and earlier.
With the 1960s as a kind of touchstone, more general sampling
produces a very di erent response. The Pew Research Center
(Washington, DC) recently polled registered voters on the
question “Compared with 50 years ago, is life in America better
or worse for people like you?” To 46 per cent of its respondents,
life seems worse now; to 34 per cent, better.
A poll by Morning Consult (also Washington-based) asked voters
whether the 1960s or the 1980s were better for them than today.
In that survey, 31 per cent of respondents chose the 1960s; 37
per cent said they were better o in the 1980s.
In marked contrast, while many economists view the USA as
still not fully recovered from the recession that began in 2007
or the previous recession of 2001, even so a high majority say
the country is a better place today than in either the Sixties or
the Eighties. In other words, in the view of the experts these are
good times for Americans – in fact, the best ever.
There is no scarcity of solid supporting evidence. According to
the Centers for Disease Control and Prevention, in 1960 the life
expectancy of the average American was a full decade shorter
than it is today.
The median personal income, after adjustment for in ation, is
55 per cent higher today than in 1960, according to the Census
Bureau. These measures of overall well-being rose throughout
the 1980s and 1990s. Why, then, the pervasive insistence that
there has been a half-century of decline in the United States?
‘Uncertain times in the labour market’
Economists consulted by Mr Zumbrun point to “a few culprits.”
(“Economists Disagree With Voters Who See US Worse O Today
Than in 1960s,” 12 th May). Among them:
† First, wages or available jobs have deteriorated for
some demographic groups, particularly men without
a high-school diploma and men who worked in
manufacturing (two groups with some overlap)
† Second, as noted by Joel Naro , chief economist of Naro
Economic Advisers (Holland, Pennsylvania), Americans
have just lived through the “ rst decade where the average
worker lost ground.” Incomes overall declined during the
two most recent recessions – although not enough to return
people to a 1960s standard of living
† Third, “Current material standards are much higher than in
1990, but the degree of uncertainty is far higher too,” said
Lou Crandall, chief economist of Wrightson ICAP (Jersey City,
New Jersey).
The USA may be healthier and wealthier than in the past, but
these have been more uncertain times in the labour market
than many workers had anticipated
† Fourth, many voters could be thinking primarily about broad
social changes that have taken place in the USA over the
past 50 years
† Finally, the election process could be undermining
con dence in the economy. “Switching presidents is always
an uncertain proposition,” observed Mr Zumbrun. “But
three-quarters [of the WSJ respondents in May] view this
year’s election as especially uncertain.”
On this point the experts and the voters draw closer
together, with a sizeable group of the reporting economists
– about 42 per cent – believing that uncertainty about the
next president is already so high as to damage the national
economy.
Michael Carey, the chief economist for North America at the
French banking network Credit Agricole, told the Wall Street
Journal, “Businesses may defer investment and hiring decisions
until they have a better sense of the direction of the next
administration.”
Mr Zumbrun concurred, noting that many economic decisions
of businesses and consumers depend, at least in part, on
con dence. He wrote, “This campaign season has been a long
exercise in talking down that con dence.”
Transatlantic Cable
Image: www.bigstockphoto.com Photographer Zsolt Ercsel