The Economy Is Remarkably Strong. Period. Stop The Bullshit.

Our Next Hopium Gathering Is Wed, Dec 13th - RSVP Today!

Friends, Happy Monday. Got a few things today to kick off the week:

Some toplines:

• 4 new polls last week showed Biden leading

• Why I am optimistic about 2024

• Next Hopium gathering is Wed, Dec 13th, 7pm EST

• Our family is making real progress in getting louder

• Great new Deep State Radio podcast on current political moment

• Winning North Carolina With Anderson Clayton

The Economy Is Strong and Remarkable. Period - I’ve been working with polling and economic data for over 30 years, and it is critical we take a step back and realize just how strong the American economy is right now. Despite COVID, the Russian invasion of Ukraine, OPEC repeatedly raising oil prices, global inflation, unprecedented GOP economic sabotage, war in the Middle East - despite it all - the American economy is on one of its best runs in decades. The data is clear. Facts are facts. This game to somehow say it is otherwise has become ridiculous, and embarrassing for the national media. This red wavy bullshit needs to end.

Consider:

• GDP growth was 5.2! last quarter

• US has had best recovery from COVID in the G7

• Inflation was zero last month

• Wage growth remains robust, 5% via Atlanta Fed; wages have been beating inflation for many months now

• Median wealth up 37% from 2020-2022; median wealth for 18-34 year oldsin this period more than doubled

• Jobs are more plentiful than anytime since the 1960s

• US has lowest uninsured rate in history

• New businesses being created at record rates

• Stock market on a very good run, near record highs, Dow is 18 times higher than 1989

• US setting records in oil AND renewable energy production

• Gen Z home ownership matching previous generations

• Many cities and states have raised the minimum wage in recent years, creating a much higher income floor for young and poorer workers

• Biden has erased $127 billion in student loan debt

• Biden investment agenda will create growth, innovation, opportunities for American workers for decades to come

I send along two charts from Joey Politano who writes here on Substack about the economy. The first shows how much better the US is doing than its G7 counterparts. The second shows that the monies invested in manufacturing construction have DOUBLED over the past two years.

From the Wall Street Journal this morning, Goods Deflation Is Back. It Could Speed Inflation’s Return to 2%.

After a historic run-up in inflation, Americans are now starting to see something they haven’t in three years: deflation.

To be sure, deflation—that is, falling prices—is largely confined to appliances, furniture, used cars and other goods. Economywide deflation, when prices of most goods and services continuously fall, isn’t in the cards.

But economists say goods prices likely have further to fall, which will ease inflation’s return to the Federal Reserve’s 2% target, perhaps as early as the second half of next year.

Prices for long-lasting items, known as durable goods, have fallen on a year-over-year basis for five straight months. In October, they were down 2.6% from their peak in September 2022, according to data released Thursday by the Commerce Department. 

That has helped bring down core inflation, which excludes the volatile food and energy categories, to 3.5% in October, from 5.5% in September 2022, as measured by the personal-consumption expenditures price index, the Fed’s preferred inflation gauge.

Yes, Simon, but people’s lived experience are telling them otherwise….inflation has still overwhelmed them, folks are still really down on the economy, etc….

I no longer believe any of that to be true. Just as the “red wave” did not capture what was going on the electorate in 2022, I just don’t believe people are as down on the economy as conventional wisdom holds. I wrote a long piece about this two weeks ago, Giving Americans The Permission To Love Their Country Again, which I hope you will read. Think about it. If folks were really down on the economy and angry, why

• Are people spending so much money right now?

• Are people so satisfied with their own life, work, incomes?

• Does the party in power, Democrats, keep winning elections across the US?

• Does almost every Senator and Governor have positive approval ratings, with the vast majority over 50%?

• Is there such a partisan divide on Biden’s economic job approval? In Economist/YouGov last week Biden’s economic job approval was 75%-17% among Dems, 15%-82% among Rs. This means the answer to this question is not being driven by “lived experience” but by partisanship, and exposure to the right wing noise machine (h/t Paul Waldman).

Look at this data from a recent Economist/YouGov weekly tracking poll of registered voters, and tell me people are really down on the economy:

• Overall, how satisfied or dissatisfied are you with the way things are going in your life today? Satisfied 64%, Dissatisfied 35%

• How happy would you say you are with your current job? Great deal/somewhat 80%, A little/not at all 19%.

• Do you consider yourself paid fairly or underpaid in your job? Paid fairly 56%, Underpaid 38%.

• Do you think your family income will increase or decrease in 2024? Increase 45%, stay the same 41%, decrease 15%.

Or this data from the Conference Board:

John Burn-Murdoch did a terrific deep dive on all this in the Financial Times on Friday, and found that American consumer sentiment is way out of wack with the econ data and what is happening in Europe:

Something weird is happening in America. GDP growth for Q3 was just revised up from an already scorching 4.9 per cent to 5.2 per cent, more Americans have jobs than at any time in history, but the public is up in arms about economic conditions, with consumer confidence dropping to a six-month low. There really is no pleasing some people.

With headline indicators in such rude health, we would expect the number of Americans who think they’re better off than this time last year to outnumber those who say they’re worse off by about 25 percentage points. Instead, the reportedly worse-offs outnumber the better-offs by ten points in the latest University of Michigan’s index of Current Economic Conditions.

I know what you’re thinking: inflation explains all of this. People really hate rising prices, and are reminded of them every time they buy something. Inflation’s salience drowns out other more distant or intangible gains. It’s certainly a good theory, but countries all around the world have faced steep inflation. Many steeper than the US. Presumably their consumers are also much more pessimistic than we would expect?

Well, no actually. Extending an original analysis by X user Quantian1, I have calculated expected consumer sentiment for a set of countries based on their underlying economic indicators, and compared it to actual sentiment. Relative to the eve of the pandemic, US consumers now appear gloomier than the French, the Germans and even the British. The Europeans all feel about as confident as one might expect based on how their economies are performing. Disproportionate doom seems to be a new American affliction.

So what’s going on? Last weekend FocalData ran a poll for me, asking a representative sample of 2,000 US adults whether they thought economic circumstances had improved or deteriorated over recent years. The results were startling: Americans are consistently wrong in the negative direction on almost every measure we polled. By huge margins, they believe inflation is still rising (it’s falling), that it has outstripped wage growth (wages have outpaced prices), and that they have become less wealthy (they’ve become much wealthier).

He then concludes:

The most striking response from our survey concerned the sense of longer-term progress. Large majorities of Americans think the median income today pays for a worse lifestyle than 30 years ago (demonstrably false), and that poverty is higher than it was a generation ago (it has plummeted). One particularly revealing statistic is that Americans’ assessment of their own financial situation has barely budged over the past five years, but their rating of the national economy has worsened steeply. It seems they have decided that the vibes are bad, so things must be going badly for most other people, even if not for themselves.

Political affiliation is also key to understanding how economic sentiments are separating from economic reality in the US. One question from the Michigan survey asks whether people think now is a good time to buy big household items. When the pandemic hit, Democrats and Republicans alike moved sharply towards “not a good time to buy”. But just months later, when Joe Biden won the presidential election — while Covid-19 still raged — Democrats suddenly declared conditions ripe for purchases of new fridge-freezers. Republicans did not.

It seems US consumer sentiment is becoming the latest victim of expressive responding, where people give incorrect answers to questions to signal wider tribal political or social affiliations. My advice: if you want to know what Americans really think of economic conditions, look at their spending patterns. Unlike cautious Europeans, US consumers are back on the pre-pandemic trendline and buying more stuff than ever.

Part of my goal in starting Hopium was to help our family come to understand that a central tactic of MAGA and the right was to pump negative sentiment into our discourse, encouraging Americans to feel bad about our country, our democracy, our institutions, our leaders, our economy, and each other. There is perhaps no area in our national conversation where they have been more successful in poisoning our discourse than on the economy - that the economy is bad is the Big Lie of the 2024 election cycle. Which is why since the first day here at Hopium I’ve talked about the need for us to talk up the strong performance of the economy under Biden, to be loud and proud as we say. For the truth is that Joe Biden is a good President. The economy is remarkably robust, and the country is better off. The Democratic Party is strong and we keep winning elections across the US. We will have a very compelling case for re-election, and if we put our heads down and do the work I think we can get to 55 next year.

But to do this we must, must, must learn how to shake off their unrelenting bullshit, counter with boundless truth, data and passion, and work together to give Americans daily permission to love this great country and each other again. We are better than they say, and when they talk down America, we need to talk it up.

Keep working hard all. We are winning, and they are not - Simon