Can Obama overcome negative economic opinions?
Doom and gloom are weighing on the minds of many Americans just months before the presidential election.
According to the Economist, “Four recent surveys have found that on average only 28 percent of Americans are satisfied with the condition of the country, while 70 percent are dissatisfied. Three recent surveys have found that between 69 percent and 83 percent of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way”
Part of this feeling can be attributed to the negative political ads that flooded the airwaves during the primary elections earlier this year. President Obama just unveiled an ad attacking presumptive GOP nominee, Mitt Romney, as an “economic vampire” thereby ensuring that the negative advertising will continue without respite all the way until Nov. 6.
Political campaigns in this country, in general, and negative advertising, in particular, tend to breed negativity among the populace. When deluged by constant negativity, it is only natural for people to feel disgusted with the state of affairs.
Then there are the public’s perceptions of economic reality.
Despite the National Bureau of Economic Research’s assertion that the recession officially ended in June 2009, a Washington Post-ABC News poll conducted last month found that no fewer than 75 percent of Americans believe that it still continues.
The highly respected Conference Board, an objective source of economic information, releases a monthly Leading Economic Index. This index consists of such indicators as jobless claims, manufacturers’ new orders for consumers goods and materials, new building permits, level of the S&P 500, consumer expectations and four other factors determining economic growth. In April, for the sixth straight month, the LEI showed an increase.
Further, Bloomberg Businessweek announced on April 19, that consumer confidence was the highest level it had been in four years, largely due to Americans feeling that their finances were improving.
The feeling remains, nonetheless, that the economic data do not accurately reflect the true state of the U.S. economy or, at least, the economy that ordinary Americans experience. This might be an example of a negativity bias that has become ingrained in the American mindset since 2008. But one must acknowledge that Americans’ depression regarding the economy does have a basis in reality.
For example, Americans’ median income has not grown fast enough to keep pace with inflation. This is probably the result of new job growth being concentrated in retail and temporary employment, which are filled with low-paying jobs.
However, the plain fact is that, on a number of objective points, the economy is improving. It’s just that 1) it is still performing below expectations and 2) Americans view of things tend to emphasize the negative and play down the positives.
According to many pundits and politicians, by this time in the 2012 presidential campaign, we would be enjoying strong, sustained economic growth. This belief, however, was grounded in our experience of such recent downturns as the Dot Com Bubble of 2000-01. This time was different.
In the earlier downturn, the high technology stocks that fueled the bubble and subsequent stock market collapse, were nowhere near as significant a part of the U.S. and global economies as are the housing and financial industries at the heart of the most recent recession.
Given the sheer volume of losses produced by the collapse of both industries ($4 trillion according to one estimate), it should come as no surprise that the recovery would be long and painful.
The second factor that appears to be dampening the collective spirits of Americans is a pervasive negative viewpoint regarding the economy. Psychologists refer to this as a negativity bias. In other words, this is a learned tendency to project more negatives onto a situation than is warranted by reality. So, despite the growing number of positive signs, many Americans glom onto a few negative ones to justify and confirm their sense of dissatisfaction with the way things are going.
This might be the biggest obstacle to Obama’s re-election, his ability to convince enough Americans that, although things might not be where many people thought they would be by now; nevertheless, we are moving in the right direction.