Will Historic Job Growth Bring an End to the “Vibecession”? The Labor Department’s March employment report shows the U.S. economy continuing to power ahead. Yet many voters’ perceptions remain stubbornly negative.

For months, the central question in American politics has been whether and when the seemingly positive economic indicators would start to reflect in the polling data concerning the presidential race. Despite robust growth in employment and GDP, alongside a rapidly declining inflation rate, President Biden’s approval ratings concerning his handling of the economy have remained stagnant at a modest 39.6 percent according to Real Clear Politics polling average.

Last Friday's jobs report for March provided a twist to this narrative. Announcing a significant creation of 303,000 jobs last month, the report surpassed Wall Street forecasts, and the unemployment rate decreased slightly from 3.9 percent to 3.8 percent, marking its twenty-sixth consecutive month below four percent—a record not seen in fifty years. Thomas Simons, an analyst from Jefferies, an investment bank, expressed astonishment at the data, conceding it left him nearly "speechless."

Over the past year, the U.S. economy has added a total of 2.9 million jobs, and since President Biden took office, a remarkable 15.2 million jobs have been added. Currently, there are approximately 5.8 million more Americans employed than before the COVID-19 pandemic began. Additionally, the jobs report brought some comforting news regarding inflation, which has decreased from a high of 9.1 percent in June 2022 to 3.2 percent, while over the past twelve months, hourly wages rose by 4.1 percent—the lowest increase since June 2021.

Despite these favorable conditions, President Biden’s ratings have not seen the expected increase. Three theories have been posited to explain this phenomenon: the consumer prices theory, the lags theory, and the vibes theory. The consumer prices theory points out that despite the reduced inflation rate, the overall cost of living including prices for food and secondhand vehicles remains high. The lag theory suggests that there is a significant delay before changes in the economy are reflected in political polls and perceptions. The vibes theory introduces the concept of a "Vibecession," as termed by economic commentator Kyla Scanlon, suggesting that Americans' subjective feelings about the economy are disconnected from the actual economic data.

Recently, a poll from the Wall Street Journal in seven battleground states further complicated this picture, showing that nearly two-thirds of respondents view the U.S. economy negatively, a sentiment that contradicts the optimistic economic figures. Furthermore, 47 percent of poll respondents noted that their investments or retirement savings had worsened over the past year, despite significant rises in the S&P 500 index and interest rates on savings accounts.

This disjunction can be partially attributed to hyper-partisanship and selective information consumption. There is also evidence to suggest that negative economic narratives have been increasingly prevalent in media coverage, a trend noted by economists Ben Harris and Aaron Sojourner of the Brookings Institution. However, they also observed a recent shift towards slightly more positive coverage by the end of 2023.

While consumer sentiment has shown signs of improvement, President Biden's economic approval ratings have only seen minor changes, possibly due to the persistent effects of past inflation increases. Despite evidence of improved job security and economic conditions under Biden’s presidency, these achievements have not penetrated the predominant economic narrative as reported in the media.  

Post a Comment

Previous Post Next Post