Earlier today I wrote about the ongoing argument between those who believe people are down on the economy because it’s actually not actually as good as it appears on paper and those who believe the negative feelings or vibes people have are being generated by some combination of right-wing media mendacity and self-delusion.

Today Nate Cohn at the NY Times wrote about this topic. Here’s how he explained the disagreement.

Yes, voters are upset about high prices, and prices are indeed high. This easily and even completely explains why voters think this economy is mediocre: In the era of consumer sentiment data, inflation has never risen so high without pushing consumer sentiment below average and usually well below average. This part is not complicated.

But it’s harder to argue that voters should believe the economy is outright terrible, even after accounting for inflation. Back in early 2022, I estimated that consumer confidence was running at least 10 to 15 percentage points worse than one would expect historically, after accounting for prices and real disposable income.

He then takes a look at the argument from each side, starting with the argument that people are being unduly influenced/aren’t rational to feel this way.

In this view, the vibe today is so biting and dour that public opinion is no longer responsive to material economic reality: The “vibe” is bad, so voters can’t see that the economy is good…There might well be something to the vibes argument. There might even be a lot to it. But there’s just not much evidence to support it.

Reading this it struck me that the “vibes” talk has some similarities to an argument that President Jimmy Carter famously made when his own administration was dealing with inflation (and many other problems). It became known as the “malaise” speech. Biden isn’t giving a malaise speech, on the contrary he’s pushing Bidenomics but people on the left are adopting vibes as a kind of malaise-like explanation for why people aren’t won over by those appeals.

The vibe explanation does have obvious implications for President Biden since how people feel about the economy is usually a major determiner of how they vote. Put another way, if the White House Bidenomics argument (things are good!) can be blocked by bad vibes, Democrats are in trouble just as they were in 1979.

It’s worth noting that this looming trouble is clearly on the minds of most of the people making this argument. That probably isn’t a coincidence. I’m not ruling out the possibility of vibes but some of these people seem to be working backwards from a desire outcome, i.e. that Biden win the election. Doing so, they find themselves arguing that anyone who threatens that end must be a partisan stooge. So they don’t see vibes as a generic malaise but more of a planned partisan one. It’s the “plandemic” version of the malaise argument.

To his credit, Cohn doesn’t take that approach. On the contrary, he seems to be leaning more toward the rational reaction side of the argument, though he’s leaving room for it to be a combination of the two.

The other side of the debate argues that the explanation is fundamentally economic, but that the factors dragging down consumers aren’t neatly captured by the usual economic statistics.

There are two kinds of adverse economic factors that this side of the debate has in mind. One is economic dysfunction — some basic things have become harder…

The other kind of adverse economic factor is the pessimism about future growth…

But whether these nontraditional economic problems add up to explain what’s going on is much harder to say.

His conclusion is that we’ll have a better idea which side is correct if the economy continues to improve. The Fed just said there would be rate cuts next year and the DOW hit a record high as investors seem to be hopeful the so-called “soft-landing” is going to happen, i.e. inflation down without a recession. If things do look better is 6 months and consumer sentiment doesn’t recover that would be a pretty strong argument for the vibes explanation. If sentiment improves as the economy improves that would tend to prove the opposite.

Cohn mentions in passing that an improving economy doesn’t automatically mean good news for Joe Biden. What if a lot of people have just decided he’s too old for the job even if the economy is good. And really, how much impact did he personally have on controlling inflation? If we get a soft-landing thanks goes to the Fed which is independent of the White House. I realize all presidents get credit or blame for the economy but mostly that’s not a very rational approach. And in case you’re wondering, I was saying there wasn’t much Biden could personally do about inflation when it was still pretty bad so I’ve been consistent on this.

The most popular comments on this story are clearly in the vibes camp. Here’s the top comment blaming the whole thing on poor Democratic messaging.

As a marketing professor, I would say that the article misses the biggest issue: Conservative media and politicians have been telling people non-stop that the economy is a problem (and using inflation as the proof). And with few exceptions the Democrats have not really responded. Yes, Biden tried to brand the economy as Bidenomics, but neither he nor the Democrats mention day after day how great the economy is. Without that, for most people the message is that the economy is bad and no one contradicts it. So one side uses proper messaging techniques and the other side scratches their head wondering why they are unpopular. It is this way on issue after issue.

Several subsequent comments blame Fox News.

Fox News is spreading disinformation about the US economy, in order to make President Biden look bad.
That is why much of the public is convinced that the economy is doing poorly, when in fact it is doing the best in the world.

But there is some support for the other side as well. Like this one from a woman in San Diego.

Anyone who is falling back on “vibes” for their attitude toward the current economy has not been grocery shopping lately or filled up at the pump. In fact, they haven’t bought much of anything lately, because everything is more expensive than pre-pandemic days and it’s almost impossible not to notice that. It costs more to do laundry, wash the car, go out to dinner, etc. Or maybe it’s just me. Nah…that’s not it.

One more:

Economic disenchantment will lessen when basic costs of actual living – housing, food, and medical care – stop breaking historical records and far outpacing the rate of “core” inflation and concurrent wage growth. These are not abstractions, and policymakers are doing literally nothing to reduce them in the manner that social democracies in other wealthy nations do.

This really has become the big economic/political debate of the moment. It’s not a new debate but it seems to be getting amplified the closer we get to the election. Again, I don’t think that’s a coincidence.