EconomyThis was an election on the US economy. And...

This was an election on the US economy. And for many Americans, the economy sucks


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“The US economy is strong.”

“Joe Biden is not getting credit for falling inflation and low unemployment, therefore, partisanship and media bias must be against him.”

“The US is outperforming Europe, so America’s incumbent party will do better at the polls.”

FT Alphaville spent much of this year trying to dispel these misguided and incomplete narratives:

It’s (still) the economy (and politics) — stupid
Why isn’t Joe Biden getting credit for America’s sturdy jobs market?
How the ‘strong’ US economy feels for poorer Americans, in five charts
America: a healthy or healthcare economy?

If you missed those, here’s a quick summary:

— America is continental. US GDP, unemployment and inflation data are particularly poor reflections on the economic experiences of households and businesses in different states and counties. For that, one must dig down for local and income-level statistics.
— A high-growth, high-spending economy is not necessarily a sign of a healthy economy. Many Americans are spending a high proportion of their money on rent, healthcare, and food, not discretionary items — and fuelled by debt.
— “Inflation falling, unemployment low=good” is too simplistic when people feel price-levels (cumulative inflation) and job security (opportunities and real wage growth) more palpably.

Frankly, none of this is new. Political fealty, culture wars, and disinformation may all play a part. But, for all those still unconvinced that people’s lived experience of the economy mattered as much as the exit polls and voxpops suggest, here are ten charts we’ve been monitoring all year.

1) A 17-22 per cent rise in the price level across swing states since January 2021 has not gone unnoticed:

Bar chart of Per cent showing High price levels and a "poor" view of the economy go hand in hand

2) The cheapest US products have seen the fastest increase in price level; implying lower-income households have faced even higher inflation (aka cheapflation):

Line chart of Index (2020=100) (Q1=cheapest Q4=most expensive) showing Cheapflation? US price levels by quartile

3) The change in price level exceeds the change in wage level across most swing states too:

Column chart of Per cent, Jan 2021-Sep 2024 showing Change in price and wage level in swing states

4) Debt delinquencies are also rising faster than the US average in key states:

Line chart of Quarterly transition rates into 90+ late, 4-quarter moving sum, per cent of balance showing Delinquency rates by state

5) A reminder of how Americans spend their money on services. The bulk of household spending is going towards non-discretionary items such as rent and healthcare:

Line chart of  Real Personal Consumption Expenditures, share, per cent showing Healthcare is a rising portion of Americans' household services spending

6) Some workers have had more luck in the post-pandemic labour market than others. The visible relative performance can impact how individuals feel about whether the economy is working for them:

Line chart of Employment level, index Jan2021=100 showing Employment: Foreign born, US Born

7) Unemployment may still be low, but those on the lowest incomes have grown most worried about losing their job since the start of the year:

Line chart of Mean probability of losing job in next 12months, per cent, 12mma showing Job separation expectations by income

8) Americans of all income levels seem to be hearing downbeat news concerning government economic policies. Outsiders may see US exceptionalism on their screens, but the realities on the ground are different, and the wealthier can shoulder it better:

Line chart of Net favourable mentions, per cent, 3mma showing News heard about government economic policies is quite even

9) All income groups feel worse off than they did when Biden started his term, although it is more stark for the bottom and middle thirds of earners:

Line chart of Better minus worse plus 100 showing Financial situation compared with a year before, by income

10) And finally. The stock market is not the real economy. America’s asset-poor see minimal upside to soaring equity and house prices:

Line chart of Nominal thousands, median, 3mma showing Current value of stock market investments by income

Still don’t trust those exit polls?



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