The mismeasure of America
America's Economy Is Being Wildly Mismeasured
Polls are fueling "pessimism inflation" — and it's going to make the next recession even more painful than the last one.
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The Lede
Economics has a variety of tools that can help us figure out which parts of society are winning and which are losing. Some of these tools are what's known as "hard data," detailed datasets that actually measure things such as the output of businesses and household spending. Then there is "soft data," surveys and polls that help us understand the lived experience of Americans — how they feel about the economy, how they expect their finances to change, and where they think the country is headed.
Key Details
- The hard data is telling a story of a strong recovery: Frontline workers and lower-income households have been riding a turbocharged job market that has boosted GDP growth.
- But the soft, survey-based data is telling a different story: Households report massive economic pessimism that is more consistent with periods of extremely high unemployment, low economic growth, and general economic disaster.
- One reason for this break between soft and hard data may lie in whom the economy is helping to lift up.
