Decoding the Covid economy contradiction on Thanksgiving
What may touch more Americans more directly every day, however, is the state of the US economy.
Here is the disconnect between the data and daily life: People are feeling the pinch due to rising costs at the gas pump and the grocery store even when there’s a lot of very good economic news to be thankful for.
I’ve borrowed much of her language for this list of arguably good news, which includes:
- US industrial output is racing ahead above pre-pandemic levels.
- Auto manufacturing bounced back last month and factory output would have been even stronger if not for hiccups in the corporate supply chain.
- Corporate profits are enviable and big companies are navigating supply chain woes, passing along higher costs to customers and even padding their profit margins along the way.
- The biggest publicly traded companies have bigger profit margins today than before the pandemic, and your retirement account probably shows it.
- The Dow is up 17% this year and the S&P 500 is up 25%. If you step back farther since the market crashed in 2020, some averages have doubled.
- Workers have the upper hand. You’ve heard it called the “Great Resignation” — Americans quitting their jobs in record numbers. In September, 4.4 million jumped ship, and economists say many are taking better jobs with higher pay and starting bonuses.
- Paychecks are fatter after years of sluggish wage growth, especially for low-wage workers. Wage growth is nearing 5%.
- Americans are saving. Thanks to higher pay, Covid-19 stimulus checks and child tax credits, Americans have an excess $2.3 trillion in savings since the crisis began. JP Morgan says its median checking account balance is 50% higher this year than in 2019.
- The economy is adding jobs. Overall, 5.8 million jobs were added this year.
There is certainly a contradiction here if the national mood is down while the economic indicators are up.
“Inflation concerns hog all the headlines, but most other indicators are roaring ahead,” Romans said in her report.
She offered two reasons consumer sentiment gauges don’t reflect the strong indicators:
- Americans are exhausted by the pandemic.
- They are bombarded every day by higher prices at the grocery store and the gas station. “Everybody drives and eats; not everybody owns stocks,” she said.
I asked Ariel Edwards-Levy, Fintech Zoom’s polling editor, how to view the national mood, and she argued the polling defies easy takeaways.
She said, “It’s simultaneously true that:
- a) concerns about the economy are on the rise,
- b) the economy still isn’t nearly as dominant an issue as it was during the Great Recession,
- c) Americans’ prevailing views of the economy right now are overall pretty lousy and
- d) views of the economy are closely entangled with partisanship.”
The partisan element is an important one. Large portions of Republicans might have a worse view of the economy right now simply because of their disregard for Biden. Democrats might have exhibited the same behavior during the Trump administration.
The American Farm Bureau Federation noted that turkeys are more expensive this year, but also added the asterisk that it shopped for turkeys to make these calculations before grocery stores had stocked for Thanksgiving.
An abundance of turkeys is something for which every American can be thankful, even if there is concern that they cost a bit more.