February 25, 2024 — By now, quite a variety of explanations have been offered for the puzzle that the unusually good state of the US economy has not been reflected in public opinion surveys, and especially not in polls regarding President Joe Biden’s bid for re-election in November. At least six hypotheses have been put forward regarding the performance-perception gap.
Perception biases
- Some charge that the official statistics must be wrong, out-of-touch, failing to capture the true state of the economy. This hypothesis is itself wrong. While any given number is subject to measurement error, the evidence from a wide variety of statistics, most of them gathered separately, has been overwhelming. They tell a very positive story, whether one looks at the measures of economic growth (GDP), strength in the labor market (jobs created or unemployment), or inflation (either CPI or PCE, and either headline or core).
Media commentary over the last two years has emphasized that the economy and job market have been slowing down. They usually fail to note that, although this is true relative to the breakneck growth of the year that immediately followed the 2020 pandemic shutdown, the current rates of expansion of GDP and employment are above their post-2000 averages.