What Would It Take to Convince Americans That the Economy Is Fine?

Published

1 year ago

February 15, 2024

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What was the worst moment for the American economy in the past half century? You might think it was the last wheezing months of the 1970s, when oil prices more than doubled, inflation reached double digits, and the U.S. sank into its second recession of the decade. Or the 2008 financial collapse and Great Recession. Or perhaps it was when COVID hit and millions of people abruptly lost their job. All good guessesand all wrong, if surveys of the American public are to be believed. According to the University of Michigan Surveys of Consumers, the most widely cited measure of consumer sentiment, that moment was actually June 2022.

Inflation hit 9 percent that month, and no one knew if it would go higher still. A recession seemed imminent. Objectively, its hard to claim that the economy was in worse shape that month than it had been at those other cataclysmic times. But substantial pessimism was nonetheless explicable.

Over the next 18 months, however, the economy improved rapidly, and in nearly every way: Inflation plummeted to near its pre-pandemic level, unemployment reached historic lows, GDP boomed, and wages rose. The turnaround, by most standard economic measures, was unprecedented. Yet the American people continued to give the economy the kind of approval ratings traditionally reserved for used-car salesmen. Last June, the White House launched a campaign to celebrate Bidenomicsthe administrations strong job-creation record and big investments in manufacturing and clean energy. The effort flopped so badly that, within months, Democrats were begging the president to abandon it altogether.

Some kind of irreconcilable difference seemed to have opened up between public opinion and traditional markers of economic health, as many op-eds and news reports noted. The Economy Is Great. Why Are Americans in Such a Rotten Mood? The Wall Street Journal asked in early November. Whats Causing Bad Vibes in the Economy? The New York Times wondered a few weeks later. Terms like vibecession and the great disconnect were coined and spread.

More recently, consumer sentiment has improved. After falling for months, it suddenly rebounded in December and January, posting its largest two-month gain in more than 30 yearseven though the economy itself barely changed at all. Yet as of this writing, sentiment remains low by historical standardsnothing like the sunny outlook that prevailed before the pandemic.

Whats going on? The question involves the psychology of moneyand of politics. Its answer will shape the outcome of the presidential election
in November.

The toll of inflation on the American psyche is undoubtedly part of the story. That people hate high inflation is not a novel observation: The Federal Reserve has long been obsessed with preventing another 70s-style inflationary spiral; its patron saint is Paul Volcker, the former Fed chair who famously broke that spiral by jacking up interest rates, which plunged the economy into a recession. But although experts and political leaders know that inflation matters, the way they understand the phenomenon is very different from how ordinary people experience itand that alone may explain why sentiment stayed low for so long, and has only now begun to rise.

When economists talk about inflation, they are often referring to an index of prices meant to represent the goods and services a typical household buys in a year. Each item in the index is weighted by how much is spent on it annually. So, for instance, because the average household spends about a third of its income on housing, the price of housing (an amalgam of rents and home prices) determines a third of the inflation rate. But the goods that people spend the most money on tend to be quite different from those that they pay the most attention to. Consumers are reminded of the price of food
every time they visit a supermarket or restaurant, and the price of gas is plastered in giant numbers on every street corner. Also, the purchase of these items cant be postponed. Things like a new couch or flatscreen TV, in contrast, are purchased so rarely that many people dont even remember how much they paid for one, let alone how much they cost today.

The irony is that consumers spend a lot more, on average, on expensive, big-ticket items than they do on groceries or takeout, which means the prices we pay the most attention to dont contribute very much to overall inflation numbers. (Less than a tenth of the average consumers budget is spent at the supermarket.) Some measures of inflationcore and supercore inflation among themexclude food and energy prices altogether. That is reasonable if youre a Fed official focused on how to set interest rates, because energy and food prices are often extremely sensitive to temporary fluctuations (caused by, say, a drought that hurts grain harvests or an OPEC oil-supply cut). But in practice, these measures overlook the prices that matter most to consumers.

This dynamic alone goes a long way toward explaining the gap between the economy and Americans perception of it. Even as core inflation fell below 3 percent over the course of 2023, food prices increased by about 6 percent, twice as fast as they had grown over the previous 20 years. I think that explains a huge part of the disconnect, Paul Donovan, the chief economist at UBS Global Wealth Management, told me. You wont convince any consumer that inflation is under control when food prices are rising that fast.

Consumers say as much when you ask them. In a recent poll commissioned by The Atlantic, respondents were asked what factors they consider when deciding how the national economy is doing. The price of groceries led the list, and 60 percent of respondents placed it among their top threemore, even, than the share that chose inflation. This isnt exactly a new development. In 2002, Donovan told me, Italian consumers were convinced that prices were soaring by nearly 20 percent even though actual inflation was a stable 2 percent. It turned out that people were basing their estimates on the cost of a cup of espresso, which had abruptly risen as coffee makers rounded their prices up after the introduction of the euro.

Gilad Edelman: The English-muffin problem

Whats more, most people dont care about the inflation rate so much as they care about prices themselves. If inflation runs at 10 percent for a year, and then suddenly shrinks to 2 percent, the damage of the past year has not been undone. Prices are still dramatically higher than they were. Overall, prices are nearly 20 percent higher now than they were before the pandemic (grocery prices are 25 percent higher). When asked in a survey last fall what improvement in the economy they would most like to see, 64 percent of respondents said lower prices on goods, services, and gas.To fully embrace the economys strength would be to sacrifice part of the modern progressives ideological sense of self.

What about wages? Even adjusted for inflation, they have been rising since June 2022, and recently surpassed their pre-pandemic levels, meaning that the typical Americans paycheck goes further than it did prior to the inflation spike. But wages havent increased faster than food prices. And most people think about wage and price increases very differently. A raise tends to feel like something weve earned, Betsey Stevenson, an economist at the University of Michigan, told me. Then we go to the grocery store, and it feels like those just rewards are being unfairly taken away.

If inflation is in fact the main reason the American people have been so down on the economyand its futurethen the story is likely to have a happy ending, and soon. My great-grandmother loved to reminisce about the days when a can of Coke cost a nickel. She didnt, however, believe that the country was on the verge of economic calamity because she now had to spend a dollar or more for the same beverage. Just as surely as people despise price increases, we also get used to them in the end. A recent analysis by Ryan Cummings and Neale Mahoney, two Stanford econmists and former policy advisers in the Biden administration, found that it takes 18 to 24 months for lower inflation to fully show up in consumer sentiment. People eventually adjust, Mahoney told me. They just dont adjust at the rate that statistical agencies produce inflation data.

Mahoney and Cummings posted their study on December 4, 202318 months after inflation peaked in June 2022. As if on cue, consumer sentiment began surging that month. (Perhaps helping matters, food inflation had finally fallen below 3 percent in November 2023.)

There is another story you can tell about consumer sentiment today, however, one that has less to do with whats happening in grocery stores and more to do with the peculiarities of tribal identity.

Its well established that partisans on both sides become more negative about the economy when the other party controls the presidency, but this phenomenon is not symmetrical: In a November analysis, Mahoney and Cummings found that when a Democrat occupies the White House, Republicans economic outlook declines by more than twice as much as Democrats does when the situation is reversed. Consumer-sentiment data from the polling firm Civiqs and the Pew Research Center show that Republicans view of the economy has barely budged since hitting an all-time low in the summer of 2022.

Meanwhile, although sentiment among Democrats has recovered to nearly where it stood before inflation began to rise in 2021, it remains well below its level at the end of the Obama administration. It may never return to its previous heights. Over the past decade, the belief that the economy is rigged in favor of the rich and powerful has become central to progressive self-identity. Among Democrats ages 18 to 34, who tend to be more progressive than older Democrats, positive views of capitalism fell from 56 to 40 percent between 2010 and 2019, according to Gallup. Dim views of the broader economic system may be limiting how positively some Democrats feel about the economy, even when one of their own occupies the Oval Office. According to a CNN poll in late January, 63 percent of Democrats ages 45 and older believed that the economy was on the upswingbut only 35 percent of younger Democrats believed the same. To fully embrace the economys strength would be to sacrifice part of the modern progressives ideological sense of self.

The media may be contributing to economic gloom for people of every political stripe. According to Mahoney, one possible explanation for Republicans disproportionate economic negativity when a Democrat is in office is the fact that the news sources many Republicans consumenamely, right-wing media like Fox Newstend to be more brazenly partisan than the sources Democrats consume, which tend to be a balance of mainstream and partisan media. But mainstream media have also gotten more negative about the economy in recent years, regardless of whos held the presidency. According to a new analysis by the Brookings Institution, from 1988 to 2016, the sentiment of economic-news coverage in mainstream newspapers tracked closely with measures such as inflation, employment, and the stock market. Then, during Donald Trumps presidency, coverage became more negative than the economic fundamentals would have predicted. After Joe Biden took office, the gap widened. Journalists have long focused more on surfacing problems than on highlighting successesbringing problems to light is an essential part of the jobbut the more recent shift could be explained by the same economic pessimism afflicting many young liberals (many newspaper journalists, after all, are liberals themselves). In other words, the medias negativity could be both a reflection and a source of todays economic pessimism.

What happens to consumer sentiment in the coming months will depend on how much it is still being dragged down by frustration with higher prices, which will likely dissipate, as opposed to how much it is being limited by a combination of Republican partisanship and Democratic pessimism, which are less likely to change.

Will the place that it finally settles in come November matter to the election? How people say they are feeling about the economy in an election yearalongside more direct measures of economic health, such as GDP growth and disposable incomehas in the past been a good predictor of whom voters choose as president; a healthy economy and good sentiment strongly favor the incumbent. Despite all the abnormalities of 2020a pandemic, national protests, a uniquely polarizing presidenteconomic models that factored in both economic fundamentals and sentiment predicted the result and margin of that years presidential election quite accurately (and much more so than polling), according to an analysis by the political scientists John Sides, Chris Tausanovitch, and Lynn Vavreck.

It is of course possible that consumer sentiment is becoming a more performative metric than it used to bea statement about who you are rather than how you really feeland perhaps less reliable as a result. Still, the story that voters have in their heads about the economy clearly matters. If that story were influenced solely by the prices at the pump and the grocery store or the number of well-paying jobs, thenabsent another crisiswe could expect the mood to be buoyant this fall, significantly helping Bidens prospects for reelection. But the stories we tell ourselves are shaped by everything from the news we read to the political messages we hear to the identities we adopt. And, for better or worse, those stories have yet to be fully written.

This article appears in the April 2024 print edition with the headline The Grumpy Economy.

US

At least 51 people killed in Texas flooding as authorities face scrutiny over response

Published

2 hours ago

July 6, 2025

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At least 51 people killed in Texas flooding as authorities face scrutiny over response

At least 51 people have died after heavy rain caused flash flooding, with water bursting from the banks of the Guadalupe River in Texas.

The overflowing water began sweeping into Kerr County and other areas around 4am local time on Friday, killing at least 43 people in the county.

This includes at least 15 children and 28 adults, with five children and 12 adults pending identification, Kerr County Sheriff Larry Leitha said at a news conference.

In nearby Kendall County, one person has died. At least four people were killed in Travis County, while at least two people died in Burnet County. Another person has died in the city of San Angelo in Tom Green County.

An unknown number of people remain missing, including 27 girls from Camp Mystic in Kerr County, a Christian summer camp along the Guadalupe River.

Rescuers have already saved hundreds of people and would work around the clock to find those still unaccounted for, Texas governor Greg Abbott said.

But as rescue teams are searching for the missing, Texas officials are facing scrutiny over their preparations and why residents and summer camps for children that are dotted along the river were not alerted sooner or told to evacuate.

AccuWeather said the private forecasting company and the National Weather Service (NWS) sent warnings about potential flash flooding hours before the devastation, urging people to move to higher ground and evacuate flood-prone areas.

The NWS later issued flash flood emergencies – a rare alert notifying of imminent danger.

“These warnings should have provided officials with ample time to evacuate camps such as Camp Mystic and get people to safety,” AccuWeather said in a statement that called Texas Hill County one of the most flash-flood-prone areas of the US because of its terrain and many water crossings.

But one NWS forecast earlier in the week had called for up to six inches of rain, said Nim Kidd, chief of the Texas Division of Emergency Management.”It did not predict the amount of rain that we saw,” he said.

Officials said they had not expected such an intense downpour of rain, equivalent to months’ worth in a few short hours, insisting that no one saw the flood potential coming.

One river near Camp Mystic rose 22ft in two hours, according to Bob Fogarty, meteorologist with the NWS’s Austin/San Antonio office. The gauge failed after recording a level of 29.5ft.

“People, businesses, and governments should take action based on Flash Flood Warnings that are issued, regardless of the rainfall amounts that have occurred or are forecast,” Jonathan Porter, chief meteorologist at AccuWeather, said in a statement.

“We know we get rain. We know the river rises,” said Kerr County Judge Rob Kelly, the county’s top elected official. “But nobody saw this coming.”

Judge Kelly said the county considered a flood warning system along the Guadalupe River that would have functioned like a tornado warning siren about six or seven years ago, before he was elected, but that the idea never got off the ground because “the public reeled at the cost”.

Homeland Security Secretary Kristi Noem was asked during a news conference on Saturday whether the flash flood warnings came through quickly enough: “We know that everyone wants more warning time, and that is why we are working to upgrade the technologies that have been neglected for far too long.”

Presidential cuts to climate and weather organisations have also been criticised in the wake of the floods after Donald Trump‘s administration ordered 800 job cuts at the science and climate organisation NOAA, the parent organisation of the NWS, which predicts and warns about extreme weather like the Texas floods.

A 30% cut to its budget is also in the pipeline, subject to approval by Congress.

Professor Costa Samaras, who worked on energy policy at the White House under President Joe Biden, said NOAA had been in the middle of developing new flood maps for neighbourhoods and that cuts to NOAA were “devastating”.

“Accurate weather forecasts matter. FEMA and NOAA matter. Because little girls’ lives matter,” said Frank Figliuzzi, a national security and intelligence analyst at Sky’s US partner organisation NBC News.

UK

How Prevent is tackling young extremism 20 years after the 7/7 bombings

Published

5 hours ago

July 6, 2025

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How Prevent is tackling young extremism 20 years after the 7/7 bombings

Radicalised nine-year-olds, teenagers mixing incel culture with extreme right ideologies and a Muslim who idolises Hitler – this is just some of the casework of those tasked with deradicalising young extremists in the UK.

Monday will mark 20 years since the 7/7 attacks on the London transport network when four suicide bombers killed 52 people and injured 770 others.

A year later the government set up its deradicalisation programme Prevent as part of its counter-terrorism strategy.

Sky News has spoken to two leading intervention providers (IPs) at Prevent who both say their work is getting ever more complex and the referrals younger.

The Metropolitan Police’s Prevent co-ordinator, Detective Superintendent Jane Corrigan, has also told Sky News it is “tragic” that when it comes to terrorism, “one in five of all our arrests is a child under 17”.

She believes parents should talk to their children about what they are reading and seeing online.

“Parents instinctively know when something doesn’t feel right when their child is becoming withdrawn or isolated – not wanting to engage,” she says.

People worried that someone they know has thoughts that could lead to terrorism can refer them to Prevent.

‘A pic-n-mix of ideologies’

Home Office figures show 11-year-olds are the largest age group to get referred.

Concerning cases are passed on to IPs such as Nigel Bromage who told Sky News: “Often there will be a pic-n-mix of ideologies.

“From my own examples and experience, we are aware of people looking at the incel culture and mixing that with some far-right elements.”

Incels, meaning “involuntary celibates” are men who have been unable to have a relationship with women despite wanting one and become misogynistic and hateful as a result.

Like many IPs, Mr Bromage from Birmingham comes from an extremist background himself, having once been a regional organiser for the proscribed Neo-Nazi group Combat 18.

For him too, it began as a child.

“It all started with someone giving me a leaflet outside my school gates,” Mr Bromage says.

“It told me a horrific story about a mum getting killed by an IRA bomb explosion – and at the end of the leaflet there was a call to action which said: ‘If you think it’s wrong then do something about it’.”

He developed a hatred for Irish republican terrorism which morphed into general racism and national socialism.

“At the very end I thought I was going to go to prison, or I would end up being hurt or even killed because of my political beliefs,” he says.

Boy, 9, groomed by his brother

Mr Bromage reveals his youngest case was a nine-year-old who had been groomed by his brother.

“He was being shown pro-Nazi video games, and his older brother was saying ‘when I go to prison or I get in trouble – they you’re the next generation – you’re the one who needs to continue the fight’,” he says.

“Really, he had no interest in the racist games – he just wanted to impress his brother and be loved by his brother.”

Every year, nearly 300 children who are 10 or younger are referred to Prevent.

Home Office figures show that over the last six years 50% of referrals were children under the age of 18.

Eleven-year-olds alone make up a third of total referrals, averaging just over 2,000 a year, with the figure rising even higher in the most recent stats.

Another IP, Abdul Ahad, specialises in Islamic extremism.

He says the catalyst for radicalisation often comes from events aboard.

Ten years ago, it was Syria, more recently Gaza.

“It is often a misplaced desire to do something effective – to matter, to make a difference. It gives them purpose, camaraderie and belonging as well – you feel part of something bigger than you,” he says.

Clients want someone to ‘hear them’

Some of his clients “don’t fit into any particular box”.

“I’m working with a guy at the minute, he’s a young Muslim but he idolises Hitler and he’s written a manifesto,” he says.

“When you break it down, some people don’t know where they fit in, but they want to fit in somewhere.”

Mr Ahad says the young individual mostly admires Hitler’s “strength” rather than his ideologies and that he was drawn to darker characters in history.

Often his clients are very isolated and just want someone to “hear them”, he adds.

Mr Ahad is also an imam who preaches at the Al-Azar Mosque in South Shields, a well-regarded centre for community cohesion and outreach.

He uses his understanding of the Islamic faith in his Prevent sessions to help guide his referrals away from extreme interpretations of the Koran by offering “understanding and context”.

He says: “We quote the correct religious texts – we explain their responsibility as a Muslim living in the UK and we re-direct their energies into something more constructive.”

Common theme of mental health issues

Mental health problems are a common theme among those referred to Prevent including depression and autism.

A recent inquest into the death of autistic teenager Rhianan Rudd found she took her own life after being radicalised by two white supremacists.

Her mother was critical of Prevent, as well as the police and MI5 after she had referred her daughter to the deradicalisation programme and Rhianan was subsequently charged with terrorism offences.

Last month a coroner found some failings in the processes around protecting Rhianan, but none of them attributable to Rhianan taking her own life.

Det Supt Corrigan says a referral doesn’t mean individuals end up being arrested or on an MI5 watchlist.

She says: “You’re not reporting a crime, but you are seeking support. I would say the earlier you can come in and talk to us about the concerns you have the better. Prevent is just that – it is a pre-criminal space.

“It’s tragic when you see the number of young people being arrested for very serious charges. Just look at terrorism – one in five of all our arrests is a child under the age of 17. We need to think about how we respond to that.”

Prevent has been criticised for failures such as when Southport killer Axel Rudakabana failed to be recognised as needing intervention despite three referrals, or when MP David Amiss’ killer Ali Harbi Ali went through the programme and killed anyway.

It’s harder to quantify its successes.

Mr Ahad says he understands why the failures hit the headlines, but he believes the programme is saving lives.

He says: “I think the vast majority of people get radicalised online because they are sitting in their room reading all this content without any context or scholarly input. They see one version of events and they get so far down the rabbit hole they can’t pull themselves out.

“I really wish Prevent was around when I was a young, lost 15-year-old because there was nothing around then. It’s about listening to people engaging with them and offering them a way of getting out of that extremism.”

‘Radicalisation can happen in days to weeks’

Det Supt Corrigan says: “I’ve sat with parents whose children have gone on to commit the most horrendous crimes and they all spotted something.

“Now, with hindsight, they wished they had done something or acted early. That’s why we created this programme, because radicalisation can happen in days to weeks.”

Twenty years on from 7/7 the shape of the terrorist threat has shifted, the thoughts behind it harder to categorise, but it is no less dangerous.

Sports

Volpe toss hits Judge as sloppy Yanks fall again

Published

6 hours ago

July 6, 2025

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Volpe toss hits Judge as sloppy Yanks fall again

Jorge CastilloJul 5, 2025, 09:42 PM ET
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NEW YORK — A blunder that typifies the current state of the New York Yankees, who find themselves in the midst of their second six-game losing streak in three weeks, happened in front of 41,401 fans at Citi Field on Saturday, and almost nobody noticed.

The Yankees were jogging off the field after securing the third out of the fourth inning of their 12-6 loss to the Mets when shortstop Anthony Volpe, as is standard for teams across baseball at the end of innings, threw the ball to right fielder Aaron Judge as he crossed into the infield from right field.

Only Judge wasn’t looking, and the ball nailed him in the head, knocking his sunglasses off and leaving a small cut near his right eye. The wound required a bandage to stop the bleeding, but Judge stayed in the game.

“Confusion,” Yankees manager Aaron Boone said. “I didn’t know what happened initially. [It just] felt like something happened. Of course I was a little concerned.”

Avoiding an injury to the best player in baseball was on the Yankees’ very short list of positives in another sloppy, draining defeat to their crosstown rivals. With the loss, the Yankees, who held a three-game lead over the Toronto Blue Jays in the American League East standings entering June 30, find themselves tied with the Tampa Bay Rays for second place three games behind the Blue Jays heading into Sunday’s Subway Series finale.

The nosedive has been fueled by messy defense and a depleted pitching staff that has encountered a wall.

“It’s been a terrible week,” said Boone, who before the game announced starter Clarke Schmidt will likely undergo season-ending Tommy John surgery.

For the second straight day, the Mets capitalized on mistakes and cracked timely home runs. After slugging three homers in Friday’s series opener, the Mets hit three more Saturday — a grand slam in the first inning from Brandon Nimmo to take a 4-0 lead and two home runs from Pete Alonso to widen the gap.

Nimmo’s blast — his second grand slam in four days — came after Yankees left fielder Jasson Dominguez misplayed a ball hit by the Mets’ leadoff hitter in the first inning. On Friday, he misread Nimmo’s line drive and watched it sail over his head for a double. On Saturday, he was slow to react to Starling Marte’s flyball in the left-center field gap and braked without catching or stopping it, allowing Marte to advance to second for a double. Yankees starter Carlos Rodon then walked two batters to load the bases for Nimmo, who yanked a mistake, a 1-2 slider over the wall.

“That slider probably needs to be down,” said Rodon, who allowed seven runs (six earned) over five innings. “A lot of misses today and they punished them.”

Jazz Chisholm Jr.’s throwing woes at third base — a position the Yankees have asked him to play to accommodate DJ LeMahieu at second base — continued in the second inning when he fielded Tyrone Taylor’s groundball and sailed a toss over first baseman Cody Bellinger’s head. Taylor was given second base and scored moments later on Marte’s RBI single.

The Yankees were charged with their second error in the Mets’ four-run seventh inning when center fielder Trent Grisham charged Francisco Lindor’s single up the middle and had it bounce off the heel of his glove.

The mistake allowed a run to score from second base without a throw, extending the Mets lead back to three runs after the Yankees had chipped their deficit, and allowed a heads-up Lindor to advance to second base. Lindor later scored on Alonso’s second home run, a three-run blast off left-hander Jayvien Sandridge in the pitcher’s major league debut.

“Just got to play better,” Judge said. “That’s what it comes down to. It’s fundamentals. Making a routine play, routine. It’s just the little things. That’s what it kind of comes down to. But every good team goes through a couple bumps in the road.”

This six-game losing skid has looked very different from the Yankees’ first. That rough patch, consisting of losses to the Boston Red Sox and Los Angeles Angels, was propelled by offensive troubles. The Yankees scored six runs in the six games and gave up just 16. This time, run prevention is the issue; the Yankees have scored 34 runs and surrendered 54 in four games against the Blue Jays in Toronto and two in Queens.

“The offense is starting to swing the bat, put some runs on the board,” Boone said. “The pitching, which has kind of carried us a lot this season, has really, really struggled this week. We haven’t caught the ball as well as I think we should.

“So, look, when you live it and you’re going through it, it sucks, it hurts. But you got to be able to handle it. You got to be able to deal with it. You got to be able to weather it and come out of this and grow.”