Every election cycle since the phrase was popularized in the 1992 presidential campaign, voters are reminded by politicians and pundits alike that elections almost always come down to one simple concept: “It's the economy, stupid.”
The 2022 midterm cycle has not parted from that tradition.
But as the fall approaches the better question might be which economy? Or better yet, the economy from what time of year?
As fall nears, the last few weeks have presented a set of contradictory numbers that raise questions about what the state of the economy actually is. Two quarters of negative growth certainly seems bad, but the economy added more than 500,000 jobs in July. That seems pretty good.
Inflation, of course, is at levels not seen for decades. But numbers this week showed consumers believe inflation is slowing.
And consider two of the biggest rough economic measures for most Americans, the price of fuel and the state of the stock market.
When Americans talk about inflation, there can be a lot of things on their minds. It could be the cost of food. It might be the price of airline tickets. But often it is what they are paying at the pump to fill their cars and that price has dropped sharply in the last few months.
The average price for a regular gallon of gas (across all formulations) has declined by about a dollar in the last month-plus — from a little over $5 on June 13 to a little over $4 on August 8. That’s the kind of change people feel because they see it concretely. When people pay, say, $15 fewer dollars when they fill up at the gas station, they are likely to notice.
If gas prices are something that hits in the wallet, the state of the stock market is something that hits people when they think about their retirement accounts. And in the last few months the news has been … better.
Since June 17, the Dow Jones Average has gained almost 3,000 points and gotten close to where it was at the end of May. To be clear the Dow is still down for the year, by about 3,700 points, but it has climbed out of the cellar. And voters opening up their 401(k) statements are probably feeling a bit better than they were at the beginning of the summer.
What does this all mean for November? That’s a good question.
A lot of the economy is mental. It’s as much about how people “feel” about it as it is about the actual state of the economy. On top of that, it’s early August. Some analysts will tell you people’s perceptions on the economy are already set by this time in an election year. And furthermore, these numbers could swing back in the other direction in a month of two. If there is any big lesson in 2022 so far, it is probably beware of making pronouncements. Instability is the rule.
But right now, things look better than they did a few months ago according to some key metrics. And the real meaning of “it’s the economy, stupid” seems less clear than in did at the start of summer.