At the beginning of this century, Italians were convinced that the national economy had gone out of control and that inflation was reaching
18% annually
, a height of syncope in the peninsula and in Europe.
The number was
actually 2%
.
What was happening for such a failure in general perception?
Every morning espresso!
This untouchable Italian symbol was what had increased 18%.
For the average citizen, the national reality
was stuck in that well.
The person who recalled this anecdote, Paul Donovan, chief economist at UBS Global Wealth Management, did so to try to understand a
strange phenomenon
that is currently happening in the United States. A distortion in observation like that of Italy that colors the current electoral campaign and the next presidential elections.
Polls tend to be more assertive in describing the social mood than when they probe the outcome of the polls.
A survey by the University of Michigan is useful, which detected that a high average of Republicans consider that economic conditions in the United States today are as bad as in June 1980,
when inflation exceeded 14% and unemployment was 7%. %.
Power, however, just experienced one of the
biggest cost-of-living improvements in history.
In June 2023, inflation was 9.1% annually.
Last December it fell to 3.4%, on the way to the Federal Reserve's goal of 2%, so it is likely that rates will begin to be lowered on January 31.
Growth above expectations
An improvement that Paul Krugman affirms occurred without significant increases in unemployment, stuck at 3.4%.
Even more revealing, the US closed last year with
annualized growth of 2.5%
and with a fourth quarter that surprised by jumping to 3.3%.
Wall Street expected 2%.
Donald Trump after winning Iowa and New Hampshire.
Reuters
Those strident numbers don't seem to be heard, at least for now.
Another survey, this one by YouGov's for
The Economist,
detected that this excessive pessimism continues among Americans fueled by fictitious data.
“58% think that the country has high unemployment (it is not like that);
44% think that the country is in recession (it is not);
and 40% believe that inflation will be higher in six months (quite unlikely),” says the British magazine.
Floating behind this distortion is a memory that explains to a certain extent
Donald Trump's electoral vigor
.
It points to the year 2022, the worst for Joe Biden compared to 2020 during the New York magnate's administration.
Krugman explains that
“Biden's economy was in trouble for much of 2022, with inflation at its highest in 40 years and fears of an impending recession.”
The latter did not happen and the indicators rearranged downwards.
An interesting paradox is that in the midterm elections of that same turbulent year, the Democrats managed to retain the Senate and
narrowly lose the House of Representatives.
The comparison with 2020 is because
fuel cost less than now
"but it was true only two months of that year, months in which unemployment was over 13%," says the Nobel Prize in Economics.
And he protests:
“How can you claim that Trump presided over a great economy when he was the first president since Herbert Hoover (the Republican who governed in the midst of the depression) to leave the White House with
fewer employed Americans than when he arrived.”
There were other darknesses.
That government of the magnate, who seeks to return triumphant to the White House, was the one that
left the most Americans without health insurance
(from 10.9 to 13.7%).
It also increased the trade deficit, including with China, which grew abysmally despite the sanctions war.
The payroll adds an
increase in debt
from 76% to 105% against GDP;
a verifiable increase in inequality according to the Gini index, and the impact of a controversial reduction in taxes in 2017 on the richest and on companies, from 35% to 21%.
Measures that encouraged growth but increased that debt and a
26% increase in the fiscal deficit.
But if those are the arguments of Trump's critics, the truth is that the majority of Americans
honestly perceive
that the economy is not doing well and that inflation is the country's main problem.
The Pew Research Center notes a collapse in consumer confidence in around 71% of those consulted.
Pessimism in fight with numbers
81% even report
conditions of poverty
or great poverty and a widening gap between rich and poor, growing by 2050. Once again, reality disputes these data.
The average income of North American households has gone from a minimum of $65,100 annually during the pandemic to $74,600.
Likewise, in the last two years the lower half of the population
increased their income 4.5%
against an average rate for the entire country of 1.2%.
Joe Biden, in the campaign, has already defined that his rival will be Donald Trump AFP
Economist and influencer Kyla Scanlon coined a term,
vibecession,
to somehow call this phenomenon that is neither inflation nor depression.
Analysts define it as
“general pessimism
about the economy independent of the economy itself.”
And they warn that the current scenario is one of a great
vibecession,
in Spanish it would be poorly translated as
vibracession
.
Not everything is imagination or a product of the catastrophism that social networks emit.
When Americans go to the supermarket they perceive that
the money is not enough as before
even though the difference is insignificant.
Donovan, the economist we cited at the beginning, points out that “food prices continue to rise.
Although less than a tenth of the average household's budget is spent at the supermarket, the prices paid there dominate
consumer
perceptions of inflation .
The result is, again, that consumers perceive inflation as higher than it really is.”
Furthermore, although there is an explosion in employment, some new jobs after the pandemic are of lower quality and income, so there are those who are forced to get two or three jobs to support their families.
This distortion would explain the
mountain of debt that consumers accumulate.
It is the first time that credit card obligations exceed one trillion dollars, red outside of other family expenses, mortgages, car loans or studies.
Items that receive an
upward impact
from the rise in rates, which has been the instrument to cool the economy and lower inflation.
Does this territory of mirages but also certainties intervene in the political decision?
It is inevitable, although it occurs with very special edges as is
the entire phenomenon.
After Trump's double victory in Iowa and New Hampshire this month and the hubbub of observers and journalists who announced an unstoppable locomotive, analyst David French differentiates himself in The New York Times by warning that those elections exposed a substantive fissure among the Republicans. .
“Trump has only obtained 51% of the vote in Iowa and 54% in New Hampshire.
“It is a figure large enough to show that he has a
strong grip on the Republican Party
, but also small enough to expose significant Republican
discontent
,” he writes.
That voter probably sees the economy as it is, without ghosts, but he does not like Biden or the also senile Trump and possibly, along with the 2020 numbers, he remembers the terrible management he exercised of the pandemic and his extraordinary limitations in the main planet chair.
To take into account.
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