Should we rethink how we talk about the American economy?
1Digest
The podcast delves into the discrepancy between the positive economic indicators often cited by economists and politicians, such as low inflation and job growth, and the actual economic experiences of individuals. This "felt economy" is characterized by stagnant wages, rising costs of living, and a lack of financial security for many Americans. The podcast examines the reasons behind this gap, including the impact of inflation, partisan bias, and negative media coverage. It highlights the disproportionate impact of economic hardship on lower earners, retail workers, rural workers, men, and non-white workers. The podcast emphasizes the importance of considering long-term economic perspectives and addressing structural issues that contribute to economic insecurity, such as rising costs of education, healthcare, and housing. It raises the question of whether economic policy should prioritize the well-being and security of citizens, considering the long-term economic realities they face.
Outlines
The Economy's Top-Line Numbers and the "Felt Economy"
The podcast discusses the focus on top-line economic indicators like inflation and job growth, often used by economists, politicians, and the media. It then introduces the concept of the "felt economy," which refers to the actual economic experiences of individuals, often contrasting with the positive headline economic indicators.
Inflation Slows, But Economic Hardship Persists
The podcast discusses the positive news of inflation slowing to below 3%, but emphasizes the persistent gap between positive economic indicators and the lack of financial security felt by many Americans.
Diagnosing the Gap: Inflation, Partisanship, and Vibes
The podcast delves into the reasons behind the gap between economic indicators and personal reality, including the impact of inflation, partisan bias, and negative media coverage.
The Impact on Different Groups: Who's Suffering the Most?
The podcast discusses the Minneapolis Fed's study on real wage growth, highlighting the disproportionate impact on lower earners, retail workers, rural workers, men, and non-white workers.
Personal Stories: The Felt Economy in Action
The podcast shares personal stories from Americans who are experiencing financial insecurity despite positive economic indicators, highlighting the disconnect between headline numbers and real-life experiences.
The Widening Gap: Stalled Wage Growth and Structural Changes
The podcast examines the stalled real wage growth for the bottom quartile of workers, indicating a widening gap between lower and higher earners, and discusses the structural changes contributing to financial insecurity.
Long-Term Perspective and the Purpose of an Economy
The podcast emphasizes the importance of considering long-term economic perspectives, as opposed to focusing solely on short-term indicators, to understand the true impact on individuals' lives. It raises the question of whether economic policy should prioritize the well-being and security of citizens, considering the long-term economic realities they face.
Keywords
Felt Economy
The subjective experience of economic conditions by individuals, often contrasting with objective economic indicators.
Real Wage Growth
The increase in wages adjusted for inflation, reflecting the actual purchasing power of workers.
Disinflation
A slowdown in the rate of inflation, meaning prices are still rising but at a slower pace.
Partisan Bias
The tendency for individuals to interpret economic information based on their political affiliations, potentially influencing their perceptions of the economy.
Asymmetric Amplification
The phenomenon where one group's economic sentiment is more sensitive to political changes than another group.
Structural Economic Issues
Long-term, underlying problems in the economy that contribute to persistent economic challenges, such as rising costs of education, healthcare, and housing.
Q&A
What is the "felt economy" and how does it differ from headline economic indicators?
The "felt economy" refers to the actual economic experiences of individuals, often contrasting with positive headline economic indicators. It considers factors like wage growth, cost of living, and financial security, which may not be fully captured by aggregate data.
Why is there a persistent gap between economic indicators and how people feel about the economy?
The gap can be attributed to factors like inflation, partisan bias, negative media coverage, and long-term structural economic issues. Inflation, for example, can lead to a sense of economic insecurity even if the rate of inflation is decreasing.
Who is experiencing the most economic hardship despite positive economic indicators?
Lower earners, retail workers, rural workers, men, and non-white workers are disproportionately affected by stalled real wage growth and rising costs of living.
Should economic policy prioritize the well-being and security of citizens, considering the long-term economic realities they face?
This is a complex question with no easy answer. While policymakers often focus on short-term indicators, it's crucial to consider the long-term impact of economic policies on individuals' lives and address structural issues that contribute to economic insecurity.
Show Notes
The topline numbers about the U.S. economy don’t seem to match what millions of Americans are feeling. Which information is right?
Table of contents
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