Why Biden Should Talk Up Economic Success

The U.S. economy has just gone through an extraordinarily successful year. Many economists (although not all of us) predicted that getting inflation under control would require a recession and an extended period of high unemployment. Instead, inflation has plunged — over the past six months the Federal Reserve’s preferred measure of underlying inflation has been running slightly below the target rate of 2 percent — even as the economy has boomed, with real G.D.P. rising 3.1 percent and employment rising by 2.9 million.

In case you’re wondering, Tuesday’s somewhat hot inflation report doesn’t change the story much. You never want to read too much into one month’s data, especially for January, which is often erratic. As Goldman Sachs noted in advance in a newsletter, the bank expects “a temporary boost to core C.P.I. from start-of-year price increases, which we expect to be most pronounced in the prescription drugs, car insurance, tobacco, and medical services categories.”

Fundamentally, the economic picture remains very good.

Yet I keep hearing political analysts and commentators saying that President Biden shouldn’t boast about the good economy, because Americans aren’t feeling it, and talking up the good news makes Democrats seem out of touch.

This is very strange advice.

For one thing, when has being humble about the economy ever worked as a political strategy? Donald Trump boasted about job creation in May 2020, when the unemployment rate was 13.3 percent, because it was down from 14.7 percent the previous month. Did this hurt him? Are pundits suggesting that Biden emulate Jimmy Carter by talking about national malaise?

More to the point, the factual premise of this commentary is wrong. All the major surveys of consumer sentiment say that Americans are, in fact, aware that the economy is improving. The venerable Michigan survey says that consumer sentiment has rocketed up over the past few months. Another long-running survey, from the Conference Board, says that consumers’ evaluation of the “present situation” is back roughly to where it was at the beginning of 2018. And a new entrant, Civiqs, also shows a substantial improvement since 2022, which has accelerated in recent months.

Why is consumer sentiment surging? It might be the rising stock market. It might also reflect the fact that news reporting on the economy, as tracked by the San Francisco Fed, has become much more positive in recent months: