When lower-income Americans speak pessimistically about the economy, they’re not being naive about declining inflation and unemployment. Let’s look at the poverty rate.
Voters from around the country discuss issues most important to them
USA TODAY spoke to voters from around the country to learn about the most important issues to them and whether anything could sway their votes.
Ask most economists, and they’ll tell you that the American economy is going strong. The stock market has witnessed robust growth in recent years, with the Dow Jones Industrial Average rising 12% since the start of the year and nearly 35% since the beginning of President Joe Biden’s term. The gross domestic product has increased in every quarter but one since Biden took office, with ensuing growth in corporate earnings and profits.
Wealthy people have done quite well, but rising prosperity has not been limited to those at the top. With total U.S. household wealth breaking records, consistent (if slowing) job growth and low unemployment rates, campaigning on the administration’s economic success would seem like a sound strategy for Biden’s vice president and potential successor, Democratic presidential nominee Kamala Harris.
Yet public opinion data continues to show that Americans, by and large, harbor negative views about the U.S. economy.
“Kamala Harris, you need to own up to the fact that the economy sucks,” one frustrated undecided voter told The New York Times. Another voter demanded to hear former President Donald Trump, the Republican nominee, explain “how he’s going to fix the economy.”
What’s behind Americans’ negative views of the economy?
The disconnect between the strong economic data and many Americans’ pessimistic attitudes about the economy has puzzled analysts. Some point to inflation, home price escalation and rising interest rates, all of which have strained families’ finances in recent years. Others write off the negativity as evidence of a mere “vibecession.”
Recent poverty data from the U.S. Census Bureau, however, reveals just how far those at the bottom of the economic distribution have fallen in recent years, and they illustrate how workers’ anxieties are about far more than just vibes.
Those trends are a bit challenging to pull out of the data, though. When we look at the official poverty rate measured by the U.S. Census Bureau, which is based solely upon households’ pretax income, the situation looks rather positive. After rising slightly during the early days of the pandemic, the official poverty rate has held steady at a historically low rate, below 12%, throughout Biden’s tenure.
However, an alternative metric also produced by the Census Bureau, the Supplemental Poverty Measure, paints a starkly different picture of trends facing low-income Americans. The SPM was created to address some shortcomings in the formula for calculating the official poverty rate, taking into account regional variations in the cost of living and refining the definition of families’ financial resources. Notably, the SPM tracks the impact of noncash government benefits, as well as medical expenses and shifts in tax policy, on Americans’ economic health.
The SPM, which fell steadily throughout the 2010s, declined sharply as federal COVID-19 relief ‒ in the form of stimulus payments, expanded child tax credits and other benefits ‒ helped families stay afloat in the wake of the economic dislocations caused by the pandemic.
In 2021, the Supplemental Poverty Measure dropped to its lowest level since estimates were first published, 7.8%. Families with children saw the biggest improvements, thanks primarily to the American Rescue Plan’s expansion of the child tax credit, which lifted millions of children out of poverty.
The expiration of that expanded child tax credit, along with other economic factors, abruptly wiped away that progress, sending the SPM soaring. In 2023, the SPM reached 12.9%, a level higher than the official poverty rate, and the increase was most acute for children.
Economic nostalgia isn’t mistaken – it’s misplaced
When lower-income Americans (especially those with children) speak pessimistically about the economy, they are not naive or ignorant about the robust economic growth revealed in official statistics. They really are poorer, in relative terms, than they were a few years ago.
For millions of American families, the pandemic-era recession was, paradoxically, the time when they were most financially secure.
Although their nostalgia is not mistaken, it may be misplaced. Those families’ economic situation really was better a few years ago ‒ not under former President Donald Trump but in the early months of Biden’s presidency. Both the Trump and Biden administrations extended economic relief to Americans during the pandemic, but it was under Biden that those benefits were most robust, reached the most families and had the biggest impact.
Disgruntled voters who choose to pull the lever for Trump because they are nostalgic for the economy of the past may be disappointed with the results if he returns to office. To the extent that the prosperity they remember was tied to the impact of expanded pandemic-era benefits, restoration of those benefits is more likely under a Harris presidency than a second Trump term.
Though Trump has voiced support for an expanded child tax credit, he has been murky on details, and the increases he has proposed are smaller than those backed by Harris and would be less targeted toward the poor.
Even as the country’s prosperity continues to grow, it is true that for many struggling families, “the economy sucks.” But how the state of the economy is felt by families is not just a function of jobs, wages or the price of eggs; it also depends on what the federal government does to help families become and remain financially secure.
Frustrated workers should keep that reality in mind as they head to the polls.
Chase M. Billingham is an associate professor of sociology at Wichita State University. His research examines patterns of inequality in American cities and schools.