Everybody “knows” two things about the economy: it’s (at least somewhat) important politically and it’s getting better.
Take the first as a given, but the second needs greater exploration.
First, what do we mean by this abstraction we call the economy?
As some of us vaguely recall from a long-ago Econ 101 class, it’s described by a series of numbers (GDP, unemployment, inflation, DJIA) and curves (supply, indifference, Phillips, production possibility frontier).
The word economy comes from the ancient Greek, the literal meaning of which comes far closer to describing what most of us mean by the word: household management.
Beyond the national economy, described by curves and statistics, there’s the everyday, personal economy in which we all live, a world focused on what comes into, and goes out of, our wallets.
If we think about the economy in national terms, people have doubts. According to a CBS News poll only 45 percent offer positive assessments of the nation’s economy. The fact that’s up from 34 percent in January is important and positive news.
But under a Democratic president and a Democratic Congress, less than half give the American economy a positive rating. That should be a little frightening with an election looming next year.
But remember last week’s column, “I’m OK, but you’re not.”
While just 45 percent rate the nation’s economy positively, 60 percent in that same CBS News poll rate their own personal financial situation as good. I’m doing OK, but most other people are in trouble.
Dig beneath that positive personal assessment though and pollsters detect economic unease.
Democrats tend to think economy is a synonym for jobs. The two words are frequently linked. “I’m focused on jobs and the economy,” says the modal member of Congress several times a day.
We think about solving economic problems primarily in terms of jobs. If people are economically ill at ease, Democrats search for ways to create more and better jobs. Always a worthy goal, to be sure.
But right now, for example, jobs are not voters’ most pressing economic concern; prices are, the cost of living.
In a recent survey we juxtaposed the two and found twice as many voters concerned about rising prices as about creating good jobs.
Cost of living concerns permeate recent Surveys of Consumers by the University of Michigan, the longest running such studies.
Study director Richard Curtin summed up his June findings saying, “Rising inflation remained a top concern of consumers.”
Open ended references to prices for houses, cars and durable goods rose to their highest level since the all-time record in 1974.
Ninety-two percent of Americans expect prices generally to surge during the next year and by an average of 4.6 percent, the biggest rate of increase in over a decade. Seventy-seven percent expect higher gasoline prices, the most since 2016.
While 56 percent expect their household income to climb over the next year, only 20 percent believe their increase in income will exceed inflation. Forty-three percent project their income will fall behind the cost of living. The number who forecast they will fall behind grew by nearly 10 points in recent months.
Democrats have plans to reduce health care and prescription costs. We need plans to reduce other prices as well and we need to focus on them.
Any search for remedies to economic problems that doesn’t deal with the cost of living, is ignoring the economy’s most salient weakness.
Mellman is president of The Mellman Group and has helped elect 30 U.S. senators, 12 governors and dozens of House members. Mellman served as pollster to Senate Democratic leaders for over 20 years, as president of the American Association of Political Consultants, and is president of Democratic Majority for Israel.