Wage Gains Can’t Buy Happiness as Americans Still Dread Futureby and
U.S. adding 1.8 million jobs this year fails to lift spirits
Tone of political discourse stirs negative feelings on future
Companies are hiring, paychecks are growing and Americans are still feeling pretty lousy about the direction of the country, a dichotomy that’s revealed itself anew in the waning days of a contentious presidential campaign.
The U.S. has added 1.8 million jobs so far this year and at 4.9 percent, unemployment is less than half of its 2009 peak, a Labor Department report showed Friday, four days before Election Day. Wages picked up by the most since 2009 on a year-over-year basis. Even so, Americans continue to see the nation going downhill: 63 percent say it’s on the wrong track, based on the latest Real Clear Politics average.
The contrast between the general feeling of malaise and solid economic data has a few possible explanations. Right-track-wrong-track questions are ambiguous and can reflect shifts in the political climate in addition to economic trends, said Alan Blinder, a Princeton University economist who’s been studying the issue. And while individuals’ financial situations may be improving, political rhetoric serves as a constant reminder that gains haven’t been shared evenly or could be a lot stronger.
“A lot of it comes down to discourse,” said Megan Greene, chief economist at Manulife Asset Management in Boston. “If you have populist politicians out there telling you that your country isn’t going in the right direction, and there are people to blame, I think that leads to a lot of negative sentiment among the population.”
How Americans feel about the nation is particularly relevant now. Early voters are already casting ballots for either Democrat Hillary Clinton or Republican Donald Trump as their next president. Voters rank the economy, as usual, among the most important issues.
“In the aggregate, the economy’s fine,” said Ellen Zentner, chief U.S. economist at Morgan Stanley in New York. “That’s an environment that typically supports the incumbent party."
This year, however, it’s been harder for Clinton to make that case. The Real Clear Politics general election average shows Clinton with nearly a 2 percentage-point lead, based on surveys taken from Oct. 28 to Nov. 3, from an about 7-point advantage in mid-October.
The race is tightening even though consumer confidence increased last week to the highest in more than two months, according to the weekly Bloomberg Consumer Comfort Index. People felt better about their personal finances and the buying climate, and views on the economy are at their brightest since January.
Even with slow growth, the economy has been creating an average 181,000 jobs a month so far this year, and jobless claims are near a four-decade low. Unemployment is below 5 percent in the battleground states of Ohio, North Carolina and Florida. And last week, the government reported the economy expanded at a 2.9 percent annual rate in the third quarter, dispelling Trump’s claim that America “is dying at 1 percent GDP.”
Campaigning in Pittsburgh, Clinton praised Friday’s jobs report as a sign of an economy “poised to really take off and thrive,” while the Trump campaign in a statement called the October employment report “disastrous.”
The fact that they’ve stayed negative despite job-market progress could reflect what voters are hearing from candidates on the campaign trail.
“These national polls, conducted in a political context, are not referenda on the economy,” according to Princeton’s Blinder.
“The economic indicators look good, but you have the propaganda machine of one of the two major candidates saying how bad things are,” said Blinder, who has advised the Clinton campaign. “On the other side, the Clinton machine has been loathe to brag about the state of the economy.”
Trump is highlighting the fact that growth has been steady but sub-par for years, and the benefits haven’t been fairly spread. So far in 2016, GDP has grown 1.7 percent per quarter on average, half the 3.4 percent quarterly growth rate the nation enjoyed during the 1990s.
The Republican candidate has also argued that Americans have been hurt by bad trade deals that have led to a big decline in manufacturing jobs. Factory payrolls have declined to just over 12.2 million from a high of 19.6 million in 1979.
“There is still some angst about the slow recovery from the recession,” said Gus Faucher, vice president at PNC Financial Services Group Inc. in Pittsburgh. “People are getting left behind.”