There was more good news about the economy today:
Data from the Bureau of Labor Statistics released on Friday showed the unemployment rate was 3.7% for the month, down from 3.9% in October. The US economy added 199,000 jobs in November, an uptick from 150,000 the previous month as striking auto workers and Hollywood actors came back to the workforce.
Economists surveyed by Bloomberg expected job gains of 185,000 with unemployment holding steady from the prior month at 3.9%.
Wages, a closely watched indicator for inflation and a gauge of how much leverage workers have in the labor market, increased 0.4% on a monthly basis and 4.1% over last year; economists had expected wages to rise 0.3% over last month and 4% over last year.
Meanwhile, the labor force participation rate ticked higher to 62.8%, up from 62.7% the month prior, while average weekly hours worked moved up slightly from 34.3 to 34.4.
The largest jobs increases in Friday’s report were seen in healthcare, where 77,000 jobs were added. Employment in government rose by 49,000, reaching its pre-pandemic level. Leisure and hospitality rose by 40,000.
Labor market data released earlier this week had reinforced a narrative in the market for a so-called soft landing where inflation reaches the Fed’s 2% goal without a full blown economic slowdown.
And yet, Americans are still saying the economy is terrible. In fact a majority say we are in a recession! Now, some of that is just partisanship. Republicans will say it regardless. But it isn’t just them. Democrats are telling pollsters the same thing.
However, take a look at the public’s actions if you want to see how they really feel. Here’s economist Justin Wolfers on twitter:
There’s no question people are telling pollsters they’re miserable about the economy. But riddle me this: Why can’t we find evidence of this pessimism in anything other that public opinion polls? Every non-poll based indicator of confidence suggests folks are optimistic.
Take consumption. If folks were worried about their economic future, you might think they would be squirrelling money away for the hard times coming. But they’re spending like they expect ongoing economic strength.
Or investment. If our future were grim, businesses wouldn’t want to invest to serve a shrinking market. But they’re investing at robust rates.
I think of starting a new business as the ultimate leap of faith. You’re pushing your chips across the table to bet that you’ll be able to find willing customers. And people are starting businesses (real businesses, not just gig jobs) at near record rates.
Or look at quits, which remain high relative to pre-pandemic norms. When you’re scared that the economy is terrible, you don’t quit your job. When you think jobs are plentiful, you think that maybe it’s worth taking the risk of searching for something better.
Inflation has caused real pain for lots of families. But take a look at inflation expectations and you’ll see that, on average, most folks understand that inflation is returning to normal rates.
What’s another forward-looking indicator of our future economic health? Say, stocks? They’re a bet on future corporate earnings, and so should rise only when we become more optimistic about our economic future. The S&P 500 is up 40% over its pre-pandemic level.
“If the economy were as good as many economists say, wouldn’t you expect Democrats to have done well in midterm and off-year elections?”
Heck, one might even look at election results for evidence that folks were unhappy…
None of this is to deny that some folks are feeling pain. I’m describing broad macroeconomic averages, and there are always some folks doing a bit better and some doing a bit worse. But note: Inequality is also falling, so these broad gains are going to those who need them!
Lemme conclude with a challenge: Polls suggest Americans are miserable about their economic future. But actual misery would also shape a range of other behaviors. Is there any evidence—outside of polls— consistent with the hypothesized pessimism?
No, there is no evidence. This is all about vibes not reality. It’s possible that if the media continues to report the good news that over time people will begin to match their personal actions with what they think about the economy. But I don’t know. There has been decades of propaganda that only Republicans can have a good economy even though the literal opposite is almost always true.
Here is a quick reality check. Feel free to send it around to your relatives and friends who think old Joe is a miserable failure: