Public perceptions of the economy are improving even though the country’s objective economic conditions are shaky — and Democrats are the most bullish.
A recent Gallup poll indicates U.S. economic confidence surged 11 points last week, putting it on par with levels from January 2008. This was the largest one-week bump since Gallup created the index.
The monthly small-business optimism report by the National Federation for Independent Businesses found only a slight increase, but hiring plans were at their strongest since February 2008.
This is despite a record number of Americans not participating in the workforce and reports that real unemployment may be as high as 19 percent.
“Despite this month’s lackluster jobs report, there has been a modest decline in the percentage of Americans saying news about the economy is mostly bad,” Pew Research Center writes.
“America is not stuck in a sluggish or disappointing economic recovery. It’s in the middle of an economic emergency with more trouble on the way. And it’s time for Washington to start acting like it,” writes James Pethokoukis, an American Enterprise Institute blogger and CNBC contributor.
Pethokoukis cites several statistics painting a dreary picture of the economy. For one, hiring is slower across the board than last year. At the current rate, it will take 11 years for the U.S. to return to 5 percent unemployment.
Even with the $800 billion stimulus, the unemployment rate has remained at or above 8 percent for 43 months.
“Growth is so slow right now that if anything goes wrong, we are likely to slip back into recession,” Pethokoukis says.
Both Pew and Gallup suggest the disconnect between economic facts and economic perception can largely be attributed to news coverage.
“While television ratings for most nights of this year’s presidential conventions were down from 2008, enough coverage of the Democrats’ convention may have filtered through to the party faithful and independents to generate improved confidence in the economy under President Obama’s stewardship. This could reflect renewed confidence in the economy per se, or heightened enthusiasm for the Democratic Party generally,” writes Gallup.
Democrats are far less negative toward the economic condition than Republicans are, Pew finds.
“Just 15% of Democrats say recent economic news is mostly bad, down from 31% a month ago and among the lowest percentages over the last four years. Six-in-ten Republicans (60%) say news about the economy is mostly bad,” Pew writes.
“Public perceptions of news about the job situation [and gas prices] remain negative, but no more negative than during the past few months,” the report accompanying Pew’s survey continues.
“Small but growing numbers say they are hearing mostly good news about other sectors – real estate values and the financial markets,” which may explain confidence in the economy, despite over arching numbers to indicate a weak and unstable economy.
With Congress back in session, there is hope that both parties and the president can reach an agreement on tax and spending policy that will avert a fiscal crisis.
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