'Feelings are not facts': Economists explain 'deeply partisan' nature of economic outlook

03 January

During 2024's U.S. presidential race, Donald Trump repeatedly claimed that the country's economy was in terrible shape and that President Joe Biden and Vice President Kamala Harris were to blame. But even though inflation has been a source of frustration for many Americans, the U.S. has enjoyed low unemployment rates during the Biden era.

On December 6, the U.S. Bureau of Labor Statistics (BLS) reported an unemployment rate of 4.2 percent.

In an article published on January 2, Business Insider's Emily Stewart discusses the role that partisan politics can play in one's view of the economy.

Ernie Tedeschi, director of economics at the Yale Budget Lab and an ex-member of the White House Council of Economic Advisers, told Business Insider, "The vibecession was not fake…. Perceptions of the economy are definitely deeply partisan."

The term "vibecession" refers to having a negative view of the economy despite positive economic data. Economist and former New York Times columnist Paul Krugman has often argued that the U.S. has enjoyed a strong, robust economy, with record-low unemployment under Biden, but lamented that many Americans felt bad about the economy regardless.

Stewart explains, "When people say the economy feels bad, they can mean a variety of things — prices are too high, the news they read is negative, the president is old. Feelings are not facts, including when it comes to GDP. Politics colors a lot of the way businesses and consumers say they see the world around them, including when it comes to money."

Joanne Hsu, director of consumer surveys at the University of Michigan, argues that Trump voters whose views of the economy are improving are responding to specific policies they expect from his incoming administration.

Hsu told Business Insider, "With the election of Trump, people have an idea of how economic policy might change over the next year and over the next four years. So people are expecting tariffs. They're expecting action on immigration. The thing is that people across the population really disagree on whether or not these policy changes are a good thing or a bad thing for the economy."

Read the full Business Insider article at this link (subscription required).

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