"The economists don't know what they're talking about."
Granted, this may seem like an odd opening for a piece by two economists, but the guy who said this -- a member of a focus group probing Americans' experiences in the current economy -- has a point.
Policy-makers are waxing ever more enthusiastic about how great things are. In response to the most recent report on the gross domestic product, the research director at the Federal Reserve Bank of Minneapolis quipped, "It's kind of boring around here because the economy looks so good."
That all depends on who's doing the looking. Virtually every poll on the subject shows much more dissatisfaction with the economy than you'd guess either by looking at the "top-line statistics" (GDP, productivity, factory orders, and so on) or by listening to the cheerleading emanating from the White House.
A recent Wall Street Journal/NBC News poll reported, for example, that public approval of President Bush's handling of the economy fell from 47 percent in January to 39 percent in July. A CBS News poll from the first week of August found that 52 percent disapproved of Bush's handling of the economy, while 42 percent approved. A Washington Post/ABC News poll showed that when the recession ended in November 2001, 13 percent said the state of the economy was poor. Last week, that was up to 21 percent.
We've heard two major reactions to these results. The first is to keep swimming in that favorite river of the out-of-touch, de-Nile. These commentators argue that people actually feel fine about the economy, but their worries about the war are spilling over into other areas.
But there's no evidence for this claim, and plenty of reasons to believe that respondents are truly reflecting their economic reality, like the fact that while productivity has soared, the inflation-adjusted wages of most workers are just about where they were when the recovery began.