It was the economy, stupid

It turns out one of the foundational economic and political narratives of 2023-2024 was just plain wrong.

Throughout much of 2023 and 2024, before Joe Biden’s unceremonious ouster from the US presidential race (and indeed afterward as well) much ink was devoted to the question of “Bidenomics” — and specifically why the concept wasn’t really seeming to catch on. On both a symbolic and narrative level, “Bidenomics” hadn’t entered the lexicon of the lay voter. But what really anguished some pundits was the fact that the strong economy ostensibly prevailing under Biden wasn’t reaping polling dividends of the kind one would usually expect.

For reference, here’s an emblematic summary of where the US economy stood from a piece published in July 2023

Unemployment is down to 3.6 percent, and the economy is still adding jobs—a couple of hundred thousand, according to last month’s report. Inflation is cooling, now down to 3 percent. Home prices have held steady, despite high interest rates. And the stock market is up more than 15 percent already this year. But even with all that, Americans feel remarkably gloomy about the state of the economy.

For certain liberal pundits and Democratic proxies, the disjuncture between the objective reality of a great economy and the ordinary voter’s perception of it could only be explained by the latter’s stupidity and/or ingratitude.

You don’t want to say that Americans are stupid,” Paul Krugman wrote in May 2023, “[but there are] huge gaps between what people say about the economy and both what the data says and what they say about their own experience.” “Overall, the U.S. economy continues to surge forward despite economists’ dire predictions,” argued MSNBC’s Joe Scarborough two months later, citing (among other things) America’s rate of GDP growth. “And despite the blather that cable-news hosts spit at you daily, your country is doing pretty damn well.”

By definition, the explanation couldn’t be a flaw in the baseline assumptions of people like Krugman or Scarborough, and thus had to be something else instead: right wing disinformation, Tik Tok, pick your poison.

For my part, I didn’t think there was much of a mystery here. If people weren’t buying “Bidenomics” as a concept, one obvious explanation was that its eponymous messenger was visibly unable to do his job or communicate with any real effectiveness. More substantively, it seemed extremely parochial to extrapolate a “strong economy” from a handful of macroeconomic indicators like GDP growth or even the unemployment rate. Homelessness spiked to record levels during Biden’s term in office. The cost of food was spiralling. And, as I argued in Jacobin, Biden had also presided over the dismantling of many of the social supports, cash transfers, and other protections introduced during the pandemic — protections that, taken together gave many Americans their first ever experience with something resembling a European welfare state.

From a perspective of pure political calculus, moreover, telling Americans the economy was great already clearly wasn’t going to play well when so many clearly felt otherwise. “Eat your vegetables”-style arguments might make a certain smug subspecies of pundit or operative feel good about themselves, but they’re a profoundly unserious and condescending way of addressing the people whose votes you’re supposed to be seeking.

In any case, it turns out that the strong economy narrative that this entire discourse swirled around was even wronger than it seemed. According to a new analysis by former US Comptroller Eugene Ludwig — entitled Voters Were Right About the Economy. The Data Was Wrong — the unemployment figures so often invoked throughout 2023 and 2024 were in fact deeply (and catastrophically) misleading:

Our research revealed that the data collected by the various agencies is largely accurate…But the filters used to compute the headline statistics are flawed. Take, as a particularly egregious example, what is perhaps the most widely reported economic indicator: unemployment. Known to experts as the U-3, the number misleads in several ways. First, it counts as employed the millions of people who are unwillingly under-employed — that is, people who, for example, work only a few hours each week while searching for a full-time job. Second, it does not take into account many Americans who have been so discouraged that they are no longer trying to get a job. Finally, the prevailing statistic does not account for the meagreness of any individual’s income. Thus you could be homeless on the streets, making an intermittent income and functionally incapable of keeping your family fed, and the government would still count you as “employed.”

I don’t believe those who went into this past election taking pride in the unemployment numbers understood that the near-record low unemployment figures — the figure was a mere 4.2 percent in November — counted homeless people doing occasional work as “employed.” But the implications are powerful. If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent. In other words, nearly one of every four workers is functionally unemployed in America today — hardly something to celebrate. [my emphases]

These conclusions are particularly notable coming from someone like Ludwig, who has spent decades dealing in hard economic numbers and empirical data as a function of his work and who, moreover, has also spent time interrogating the gaps between those numbers and how they’re perceived. In this case, as he vividly demonstrates, the voters were right and the Eat Your Vegetables crowd was wrong.

Complex electoral outcomes never have a single cause or explanation, and there were obviously plenty of reasons for the Democratic defeat last November. But, when it comes to the essential issue of the economy, we now know that one of the most cherished axioms of elite liberal discourse in the second half of Biden’s term was simply untrue.

In poll after polls, ordinary Americans communicated their frustration and anxiety with the state of things. Instead of listening, reevaluation, or responding accordingly, Democrats preferred to scold them and rattle off statistics instead.