Inflation, the Economy, and Political Ignorance
Inflation and high prices have emerged as major issues in the 2024 presidential election. Public anger over these issues—and the general state of the economy—may be the single biggest obstacle to President Biden’s reelection chances. A recent Harris poll commissioned by the Guardian finds that public attitudes on inflation and the state of the economy are heavily influenced by ignorance. While there really was a big increase in inflation in 2021-22, the current state of the economy is much better than most voters believe:
The poll highlighted many misconceptions people have about the economy, including:
55% believe the economy is shrinking, and 56% think the US is experiencing a recession, though the broadest measure of the economy, gross domestic product (GDP), has been growing.
49% believe the S&P 500 stock market index is down for the year, though the index went up about 24% in 2023 and is up more than 12% this year.
49% believe that unemployment is at a 50-year high, though the unemployment rate has been under 4%, a near 50-year low….
The poll underscored people’s complicated emotions around inflation. The vast majority of respondents, 72%, indicated they think inflation is increasing. In reality, the rate of inflation has fallen sharply from its post-Covid peak of 9.1% and has been fluctuating between 3% and 4% a year.
In April, the inflation rate went down from 3.5% to 3.4% – far from inflation’s 40-year peak of 9.1% in June 2022 – triggering a stock market rally that pushed the Dow Jones index to a record high.
The poll also finds that 58% of respondents blame Biden for the state of the economy. This is part of a broader pattern where people credit and blame incumbent presidents for short-term economic trends, even though the latter generally have only modest influence over them.
The Guardian, of course, is a left-wing media outlet, and that viewpoint may well have influenced them to commission this survey. But Harris is a generally respected polling firm, and I don’t see major flaws in the wording of the relevant questions in this survey.
Biden probably does deserve some blame for the massive outbreak of inflation in the immediate post-pandemic period. He supported massive spending increases that helped create a situation where there was a vast increase in the amount of money in the economy that was not matched by a comparable increase in production. But most of that spending was also supported by the Republicans, including President Donald Trump, when he was still in office in 2020-21. Biden also deserves blame for continuing many of Trump’s tariffs (which caused significant price increases and reductions in consumer welfare) and adding some of his own. Nonetheless, few of the policies that helped cause inflation are ones that Biden supports, but Trump would have acted differently on. There was also bipartisan support for the Federal Reserve’s massive infusion of money into the economy during Covid.
The evidence in this poll is just the tip of a larger iceberg of public ignorance about inflation, prices, and related issues. For example, a February poll found that 59% of Americans believe corporate greed is a “major cause” of inflation. Economists overwhelmingly reject that view—not because corporations aren’t g
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