People Don’t Know Precise Information About Economy, Just Their Own Experiences
A lot of hubbub today about this Bloomberg poll, showing that Americans don’t pay attention to CBO or NBER reports or watch C-Span very often.
A Bloomberg National Poll conducted Oct. 24-26 finds that by a two-to-one margin, likely voters in the Nov. 2 midterm elections think taxes have gone up, the economy has shrunk, and the billions lent to banks as part of the Troubled Asset Relief Program won’t be recovered.
“The public view of the economy is at odds with the facts, and the blame has to go to the Democrats,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the nationwide survey. “It does not matter much if you make change, if you do not communicate change.”
We know that the White House hid the main tax cut in an attempt at behavioral economics. So you can hardly blame people for not knowing their taxes went down; that was the point. Economic growth is a construct of productivity that workers aren’t likely to believe until it appears in their paychecks. And as for TARP, well, the claims of success are in fact dubious.
In a Gallup poll with a similar result, a majority of people don’t think Congress accomplished more than usual this year. When your signature accomplishment doesn’t get implemented until 2014, and your other accomplishment is about regulation on a several-block radius in Lower Manhattan, this shouldn’t come as such a surprise either.
Here’s the point. If Bloomberg or Gallup ran a poll saying “Are you out of work,” I’d guess they’d get a response very close to official statistics (if not above them, because the statistics traditionally undercount). If they ran a poll saying “Are you worried about the mortgage,” they’d get a result close to reality (in fact, someone ran this poll yesterday). If they ran a poll saying “Have your wages gone up,” you’d pretty much find an accurate response. On taxes, the public got it wrong, but the main benefit was hidden, and anyway people habitually think taxes are high, especially if they don’t see the benefit from them.
What matters to people is whether or not their personal situations have improved. It’s not clear to me that’s wrong, actually. The increase or decrease in GDP is an abstract thing; so is TARP, especially given how circumscribed that debate has become. People aren’t equipped to answer those questions, and in many ways they never will be. But people can figure out their own personal situations. And this is the big danger for incumbent politicians going forward. I’m not a Charlie Cook fan, but he’s right:
Nobody has a crystal ball in this business, and we can only speculate about how the politics of the next two years will play out. However, everything indicates that we’re in for a tough time. Washington is likely to stay as dysfunctional and as partisan as ever. Economic growth looks to hover around 2 percent through the end of 2011, and some think even that might be too optimistic. Growth in the gross domestic product needs to be at least 3 percent to drive any meaningful job creation. We could be heading into 2012 with an unemployment rate somewhere around 9 percent, a horrifically high level. The last time that unemployment was under 8 percent—still exceedingly high—was in January 2009. Through the end of September, 6.1 million Americans, 42 percent of the unemployed, had been out of work for 27 weeks or longer.
The economy will be creating some new jobs, but most will be low-paying. The large numbers of mortgages that are underwater and the unsold stock of new homes in places such as Arizona, California, and Florida will keep this recovery very slow and difficult. It is most unlikely that the United States will enjoy the kind of economic rebound that benefited President Reagan coming out of the 1982 recession and allowed him to run for reelection in 1984 on a theme of “Morning in America.”
The sour economy will only turn up the pressure on Washington and on anyone who holds public office, Democrat or Republican. Incumbents in both parties should be worried about the political implications of the nasty downturn lasting so long. Voters have demonstrated very little patience with their elected officials and have developed itchy trigger fingers, ready to dispose of any politician who doesn’t deliver what they are looking for.
Arguing academically about the official end of the recession or the return on one part of the investment in the banks probably makes people even angrier, I’d gather. The lesson to draw from this “misinformation” is that government policy must be targeted to create a tangible benefit for people. Otherwise they tune you out.