The US economy is currently facing a perception problem, despite positive economic data. According to a recent CNN Poll, 58% of Americans believe that President Joe Biden’s policies have worsened economic conditions, up from 50% last year. However, economists argue that the economy has significantly improved under Biden. Unemployment has remained low at around 3.5%, and real wages are rising. People are still spending money, indicating optimism about the economy. The disconnect between reality and perception is causing a sour mood among Americans.
Several factors contribute to this negative outlook. Inflation, housing affordability, and political polarization are key issues. Economists are revising their growth forecasts upwards, indicating strong economic performance. However, inflation has been a concern, with prices rising significantly in 2021 and 2022. Gas prices have also been volatile, adding to the frustration felt by consumers. Additionally, housing affordability has reached historic lows, with mortgage rates climbing above 7%. The combination of higher financing costs and low inventory has made it difficult for people to buy homes.
The CNN Poll reveals that both Republicans and Democrats have become more critical of President Biden’s handling of the economy. Only 2% of Republicans and 48% of Democrats believe that economic conditions have improved under Biden. These opinions are likely influenced by political affiliation rather than objective economic conditions. This poses a challenge for Biden’s re-election campaign, which has emphasized the strength of the economy. Despite this, former White House senior adviser David Axelrod suggests that the president needs to find ways to discuss his achievements without directly asking for approval from the American people.