A wide variety of polling organizations regularly ask Americans whether they are “satisfied or dissatisfied” with the way things are going (the Gallup version) or whether the country is “heading in the right direction” or “on the wrong track.” Lately, no matter how the question is phrased, Americans have responded with what sounds a lot like a Bronx cheer.
In six such polls taken between Oct. 8 and Oct. 20, 64% of respondents said the U.S. is on the wrong track, according to the Real Clear Politics average. Only 29% said the country is going in the right direction. Commentators often interpret “the wrong track” as pertaining to the economy. But does it? Maybe not.
As Ben Bernanke, the former chairman of the Federal Reserve, noted in a June blog post for the Brookings Institution, survey questions about the economy do not elicit such doleful responses when they are unrelated to politics. Both the University of Michigan and the Conference Board have been polling “consumer sentiment” or “consumer confidence” for decades. In recent months, these surveys have generally shown that American consumers are just as happy or optimistic as they were before the Great Recession.
The thing that has gotten so many Americans down in the mouth, Mr. Bernanke suggested, might be the increasingly shrill, partisan nature of our politics, not the state of the economy. I agree. And the objective economic data support this conclusion. Consider:
g The national unemployment rate, which rose as high as 10% during the Great Recession, has been hovering around 5% for more than a year-roughly where it was before the recession.
g Most measures of inflation are pretty close to where they were then. For example, the latest core CPI inflation reading for the past 12 months was 2.2%. In December 2007 it was 2.4%.
g The poverty rate of families in 2015 (the latest year available) was 10.4%. Back in 2008, it was 10.3%.
g The S&P 500 is about 215% higher today than its 2009 low. The Dow Jones Industrial Average is up about 175%.
g Even real wages, which stagnated for decades, are finally racking up gains, with real average hourly earnings up 4.4% since 2014.
In brief, almost everything that should go up is going up, and almost everything that should go down is going down. American consumers live with this underlying reality every day, and so they express confidence in economic surveys. Yet they also say the country is going in the wrong direction. Why?
One hypothesis is that statistical averages are misleading when inequality is rising so much. When the top 1% hogs most of the gains, you can get a reverse-Lake Wobegon effect, with almost everyone doing worse than average. Might inequality explain the discrepancy between the two types of surveys?
Not likely, as Deutsche Bank economist Torsten Slok recently pointed out, citing data from the Conference Board’s index of consumer confidence. Among households earning less than $15,000 annually, confidence is at its highest level in 15 years. These people are poor, to be sure, but their optimism about the economy is way up-like everyone else’s.
I’d like to advance a different hypothesis, which harks back to Mr. Bernanke’s supposition: that it’s not the economy, stupid. Rather, the wrong-trackers are dismayed by our dysfunctional, and lately embarrassing, political system.
I have long wondered what people are thinking when they answer the “right track/wrong track” question. If you ask me about the economy, my answer depends on what specific aspect you mean. But if you press me to answer either “right track” or “wrong track” on the whole, I’d certainly choose “right track.” However, if you ask me about the political system, I’d say it’s not simply on the wrong track, but that it has run completely off the rails. I think many Americans agree.
We have had political gridlock in this country since the 2010 midterm elections. Problems fester, but Washington does nothing. Each party deserves a share of the blame, I suppose, but certainly not an equal share. The fact is that congressional Republicans have blocked almost everything and proposed little.
ObamaCare and the Dodd-Frank Act, two landmark pieces of legislation, are prime examples. The former was passed without a single Republican vote; the latter received only a handful. Even Democrats agree that both laws could stand improvement. But Republicans seek repeal more than repair. Partisan gridlock blocks progress-and makes Americans understandably angry.
Political dysfunction created a perfect environment for the unspeakable Donald Trump, who came along seeking to make America hate again. Although he will lose the election, he has succeeded in stoking hatred. That truly puts us on the wrong track.