Economy's Mixed Signals Spark Debate Over Whether Public Pessimism is Just Bad Vibes or Reality
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Public opinion about the economy has been extremely negative despite many traditional economic measures being strong. This has sparked a debate over whether views are driven by "vibes" or concrete factors.
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The "vibes" argument is that noneconomic factors like media and social media are preventing people from accurately assessing the economy. But there is little evidence for this.
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The concrete factors argument is that economic dysfunction and pessimism about future growth explain negativity. This is supported by some evidence like yield curve inversion.
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Recent positive economic news like inflation cooling, stocks rebounding, and falling mortgage rates puts the concrete factors argument to the test.
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If economic conditions continue improving and confidence rises, it would support the concrete factors view and potentially aid Biden's re-election bid.