Will Historic Job Growth Bring an End to the “Vibecession”? – By John Cassidy (New Yorker) / April 9, 2024
The Labor Department’s March employment report shows the U.S. economy continuing to power ahead. Yet many voters’ perceptions remain stubbornly negative.
For months now, one of the key questions—perhaps the key question—in American politics has been when, and if, good economic news will feed into the polling data on the Presidential race. Growth in employment and G.D.P. has been much stronger than expected, and the inflation rate has come down faster than predicted. Yet President Biden’s approval rating on handling the economy has barely budged. (As of Monday, according to a Real Clear Politics poll average, it stood at a lowly 39.6 per cent.) Last Friday’s job figures for March heightened the conundrum. The Labor Department announced that the economy created another 303,000 jobs last month, greatly exceeding Wall Street predictions; the unemployment rate ticked down from 3.9 per cent to 3.8 per cent, marking its twenty-sixth straight month below four per cent, a fifty-year record. Thomas Simons, an analyst at the investment bank Jefferies, commented, “The data leaves us borderline speechless.”
During the past year, the economy has added 2.9 million jobs, and since Biden came to office it has added 15.2 million jobs. All told, there are now about 5.8 million more Americans at work than there were immediately before the covid-19 pandemic started. And for those who are still concerned about the inflation rate, which has fallen from a high of 9.1 per cent in June, 2022, to 3.2 per cent, the new jobs report contained some reassuring news on that front, too. In the twelve months before the report was issued, hourly wages rose by 4.1 per cent–—the lowest figure since June, 2021, and another indication that inflation is contained. Strong economic growth combined with low unemployment and low inflation is pretty much an ideal outcome for any policymaker.
There are at least three explanations for why Biden’s ratings haven’t benefitted from these developments: the consumer-prices theory, the lags theory, and the vibes theory. The prices theory emphasizes that price levels—and the over-all cost of living—remain high, despite much lower rates of inflation. The lags theory says that people’s perceptions about politicians and economic policymaking can take quite a while to catch up with a changing environment. The vibes theory says that, for whatever reason, many Americans’ subjective feelings about the economy have lost touch with reality. To use the term coined by the economic commentator Kyla Scanlon, many of them are still stuck in a “Vibecession.”
