We noted, last September, an article by Heather Long stating that, “The general public has ‘extremely little factual knowledge’ about the job market and labor force,” and:
The U.S. unemployment rate is only 4.9%, but 57% of Americans believe it’s a lot higher than that, according to a new survey by the John J. Heldrich Center for Workforce Development at Rutgers University.
The general public has “extremely little factual knowledge” about the job market and labor force, Rutgers found.
It’s another example of how experts on Wall Street and in Washington see the economy differently than the regular Joe. Many of the nation’s top economic experts say that America is “near full employment.” The unemployment rate has actually been at or below 5% for almost a year — millions of people have found jobs in what is the best period of hiring since the late 1990s.
But regular people appear to have their doubts about how healthy America’s employment picture is. Nearly a third of those survey by Rutgers believe unemployment is actually at 9%, or higher.
Republican candidate Donald Trump has tapped into this confusion. He has repeatedly called the official unemployment rate a “joke” and a even “hoax.”
Since the election, economic conditions have only gotten better. While the official unemployment rate remains very close to what it was before the election, the stock market has soared. On Monday, November 7, 2016, the Dow Jones Industrial Average closed at 18,259.60, up 371.32 points, or 2.1%, in what Market Watchwriter Sue Chang called the “Clinton Relief Rally.“ On election day itself, the Dow rose slightly, 72.83 points, or 0.4%, in what Quincy Krosby, a market strategist at Prudential Financial, called markets “pricing in a Hillary Clinton victory.”
Well, former Secretary of State Hillary Clinton didn’t win, and Dow futures fell a whopping 750 points as Donald Trump took several ‘battleground’ states Mrs Clinton had been expected to carry, but, as Matt Egan of CNNMoney wrote, after the markets closed on Wednesday, November 9th:
That didn’t take long. An overnight panic in global markets evaporated as Wall Street gave an emphatic welcome to President-elect Donald Trump.
The Dow soared 257 points and brushed up against lifetime highs on Wednesday, in defiance of those who predicted Trump’s election would bring about a plunge in the stock market. The S&P 500 and the Nasdaq rose 1.1% apiece.
The impressive market performance represents a dramatic reversal from the knee-jerk panic in global markets overnight as the results were coming in. Dow futures plummeted nearly 900 points at one point as investors expressed fear that no one would emerge victorious and concern about the inherent uncertainties brought on by a Trump White House.
Since the election, the market has only gone up. The Dow closed at 20,821.76 on Friday, up 2,489.33 points, or 13.58% since election day, while the broader market indices are also up by double digit percentages.
And that is what makes the following article so strange. From CNNMoney:
by Matt Egan @mattmegan5 February 24, 2017: 3:09 PM ET
How’s the economy doing? The answer may depend on who you voted for.
At first glance, Americans appear to have gained significant confidence since the conclusion of the deeply-polarizing election of Donald Trump.
The University of Michigan said on Friday that its index of consumer sentiment was higher during the past three months than at any time since March 2004. Trump has been quick to take credit for the confidence boost, tweeting about it late last year before he even took office.
But those headline numbers mask a stark divide among Americans based on party affiliation.
The recent bump in consumer sentiment is the result of an “unprecedented partisan divergence,” according to Richard Curtin, the chief economist of the University of Michigan survey.
The survey shows “Democrats expecting recession and Republicans expecting robust growth,” Curtin wrote.
In reality, economists don’t think the U.S. economy will either contract or boom in the near future. Much depends on the fate of Trump’s agenda of massive tax cuts, infrastructure spending and deregulation.
There’s more at the link.
Mr Trump’s victory was won despite the opposition of the investor class, yet, here they are, the investor class, pushing stock prices to record levels. At least among investors, whom one supposes pay much closer attention to economic indicators and facts, Clinton supporters though they might have been, recession doesn’t seem to be much of an immediate worry. We have noted that it has been a long time since the last recession officially ended, but that, despite what the Democrats said was a good economy, 2016 saw the slowest growth in real Gross Domestic Product since 2011.
What all of this tells me is that people are taking economic decisions based not on what they know, but what they feel. The Federal Reserve anticipates real GDP growth to be only 2.1% this year, something which hardly justifies investors sending stock prices up by over 10% since the election. The Democrats thought that the economy was doing just fine, yet the economy was growing more slowly than it had been.
It’s not just the Democrats who seem to be guided by their feelings concerning President Trump. Republicans and independents are seeing boom times ahead, but little of that appears to be based on economic facts. That 1.6% real growth rate is a hugely important number, because it means that the economy’s performance has to change, and change significantly, to approach anything close to an economic ‘boom.’ President Trump’s tax plans, if they pass at all, won’t pass until August, according to Treasury Secretary Steve Mnuchin, and his infrastructure spending proposals haven’t been submitted yet. Whatever effect Mr Trump’s policies will have on the economy aren’t likely to be very large in 2017.
The credentialed media are absolutely up in arms over President Trump’s hatred of them, of him calling them liars and producers of ‘fake news,’ but if the American people are mostly uninformed about the economy — and I believe that they are — it is because the professional media do such a poor job of informing them. Other than the official unemployment number, U-3, which is released the first Friday of every month, the media simply do a poor job in getting economic information out to the public, in a fashion that the public will actually see. CNNMoney is a good website, but other than Christine Romans hosting the very early edition on CNN — she’s off the air at 6:00 AM — CNN presents very little economic information during the day. Fox and MSNBC do a similarly poor job. The Wall Street Journal is a great newspaper, but far too few people read it, and you have to be a subscriber to see most of the articles on their website. Even CNBC is something of a problem, concentrating more on market news than economics.
The American people need more economic news, and they need it in a fashion which isn’t going to be based upon the media’s political biases.