Against the Economic Cheerleaders

It can't be a coincidence that Newsweek and BusinessWeek both proclaim (with caveats buried deep within) that America is back, that the worst is over, that a bright future for the country is ahead. It's not the analysis that troubles me, it's the perspective from which that analysis is derived. It is absolutely true that the worst is over, and is absolutely true that way too many Americans are suffering, and will continue to suffer, much more than when similar headlines were written about the ending of other recessions.

Americans don't think the economy's getting better, and they're not confident it will get better. That's the governing party's major political challenge for the midterms. It also produces a disjuncture between elite opinion, which is talking up the economy, and public opinion, which is living with it.

I think the authors of these pieces are talking to their friends at private equity firms and on Wall Street -- where exuberance reigns -- and aren't talking as much to vice presidents at, say, General Electric. It's harder to talk to corporations when they're not performing well and still in cautionary/recession mode. So there are more sources available to reporters who will say good things about the economy than will say bad things.

Furthermore, those writing the articles may have had trouble refinancing their mortgage, but probably aren't underwater: they have jobs, they aren't mobile, so they are somewhat disconnected from the depth of economic duress. (Again, these articles include caveats, but they're intellectual, not emotional -- the authors don't give much weight to the experiences that don't comport with their own.) 

The truth is that unemployment is massive and people have a myriad of challenges. Millions face their own private liquidity crises. The unemployment rate might rise between now and November as people dip their toes back into the job market and discover that it's still way too cold.

In general, the economy we see today is probably the economy we'll see in November. That creates a political challenge for the White House and Democrats: they desperately want credit for saving the economy, and they're eager to participate in stories that play up the economy. The mental figurin' is that if the status quo is the status quo, it's be better to talk it up than to project caution.

It's true that the White House and its officials tend to be prudent, and that no statement on the economy escapes the barriers of the press office without a prominent mention of unemployment and lending. But if they believe that people's general level of suffering will remain constant, it makes sense to talk up the good stuff. Still, it's a sensitive balance. Smart pols know that political reality isn't what is, or what ought to be, but what's thought to be.