Krugman: Public’s mood on economy shows a subtle positive shift

It might not provide much help to President Biden, but it may not be as much of a drag on him, either.

By Paul Krugman / The New York Times

What will happen in November’s election? I have no idea, and neither does anyone else. But I thought it might be worth flagging a development that probably isn’t getting enough notice: Americans seem to be quietly getting more optimistic about the economy.

We’ve come to take it as a given that no amount of good news will change Americans’ negative view of the economy; they were shocked by the inflation of 2021 and 2022, and the story goes, it will be years before they acknowledge that inflation is down and jobs are abundant. But there are at least hints that views may be changing, and faster than many observers realize.

One source of evidence is the New York Fed’s monthly Survey of Consumer Expectations. I usually follow that survey to track expected inflation, which remains fairly subdued. But the survey also asks consumers whether they expect their financial situation to be better or worse a year from now.

There has been a huge improvement not just since the worst of the inflation surge but even since late last year. We’re almost back to the optimism that prevailed in President Joe Biden’s early months, before inflation took off.

Another source of evidence, albeit with less of a track record, is a survey conducted by The Financial Times and the University of Michigan’s Ross School of Business, which asks voters whether Biden or Donald Trump would do a better job of managing the economy. Earlier this year Trump had a double-digit lead; now it’s down to 4 points.

It’s still unlikely that the economy will be a net plus for Biden. But it may be much less of a drag than many expect (especially given falling gas prices). Which in turn means that the election may turn on other issues, like the Republican threat to birth control.

This article originally appeared in The New York Times.

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