Why Are Americans Still Down on the Economy?

Are you better off today than you were four years ago? Honestly, I didn’t think Republicans were going to try replaying Ronald Reagan’s famous line, since so much of the G.O.P.’s 2024 strategy depends on a sort of collective amnesia about the last year of Donald Trump’s presidency. Is it really a good idea to remind voters what the spring of 2020 was like?

For it was a terrible time: It was a time of fear, with Covid deaths skyrocketing. It was a time of isolation, with normal social interactions disrupted. It was a time of surging violent crime, perhaps brought on by that social disruption. It was a time of huge job losses, with the unemployment rate hitting 14.8 percent that April. And do you remember the great toilet paper shortage?

Also, when Reagan delivered that line in 1980, things were pretty bad, with 7.5 percent unemployment and 12.6 percent inflation, and the 1979 gas lines were still fresh in memory. Today, unemployment is below 4 percent and inflation is around 3 percent (and probably, despite some noisy recent statistics, still heading down).

Some observers, however, tell us to ignore fancy statistics indicating that America is doing pretty well. Americans’ lived experience, they say, is that it’s still a lousy economy. And isn’t the customer — or in this case the consumer — always right?

Well, I do not think that word, “experience,” means what they think it means. It’s true that most Americans have a negative view of the economy. But people don’t directly experience the economy. What they directly experience are their own financial circumstances — and most Americans are feeling relatively positive about their own finances.

Before I get into the numbers, let’s talk about what we’re capturing when we measure consumer sentiment, either in opinion polls or in regular surveys conducted by the University of Michigan Surveys of Consumers, the Conference Board or Civiqs. For the most part, these surveys don’t ask about consumers’ personal experiences; they ask for their views about the economy overall — that is, what they think is happening to other people.