Opinion

King: Americans perceive economy as worse than it is Bill King says as long as political parties bicker and there is a 24/7 cable news cycle promoting calamity, good fiscal reports will be rare.

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Last week, the Commerce Department issued revised estimates of the country's gross domestic product (GDP), roughly the value of all goods and services produced, for the second quarter. The new number showed a 4.2 percent growth, which, by most measures, is a pretty good growth rate. Some of the improvement was a rebound from a 2 percent decline in the first quarter that most economists attributed to the harsh weather last winter. Still, the consensus estimates put the GDP growth for the year at around 3 percent. Good, but not great.

According to economists, the Great Recession of 2008-2009 ended in June 2009. After declining five out of six of the previous quarters beginning in 2008, the economy grew in the third quarter of 2009 and has continued to grow since that time. In only two quarters since June 2009 has the economy declined and the average growth since then has been about 2.2 percent

What is fascinating, however, is that most Americans continue to think that the economy is getting worse. In fact, despite the economic evidence to the contrary, since the recession in 2008-2009, a sizable majority of Americans have consistently told pollsters they think the economy is getting worse.

At the height of the recession, about 85 percent of Americans thought the economy was getting worse and, of course, they were right. By mid-2010, the percentage who believed the economy was getting worse had dropped to the range of 50 percent to 60 percent. With two exceptions, it is has been stuck in that range ever since. In the summer of 2011 and the fall of 2013, the percentage spiked and, in both cases, about three-quarters of Americans thought the economy was getting worse. The latest numbers show that about 60 percent think the economy is in decline.

How can we explain this considerable disconnect between how Americans view the economy and what economists tell us about the numbers?

First, there is the fact that most people's opinions about the economy are informed by their personal circumstances. Even today, we still have nearly 10 million people who would like to go to work and cannot find a job. Another 7.5 million are only working part-time because they cannot find a full-time job. Just under another million have given up looking for work. It is going to be pretty hard to convince those folks and their families that things are getting better.

And there is considerable evidence to suggest that the official unemployment numbers significantly underestimate those who cannot find work. The participation rate, that is, the percentage of the adult population in the work force, is near historic lows. Some of that can be explained by demographic changes, but it also suggests there are fewer opportunities for workers.

There are also a number of critics of the methodology used by the U.S. Labor Department in calculating the unemployment rate. For example, one study done by Alan Krueger, a Princeton economist and former chairman of the President's Council of Economic Advisers, suggests that various social and technological changes, like the advent of cellphones and caller ID (allowing someone to ignore a polling call), are causing the Labor Department to undercount the unemployed.

So one of the reasons so many people think that the economy is not getting better is because it is actually not getting better for them.

But the spikes in negative sentiment in the summer of 2011 and the fall of 2013 also tell us something about possible reasons why Americans view the economy more negatively than the numbers seem to indicate. The increase in negative sentiment in 2011 coincides with when House Republicans were threatening to default on government debt and the 2013 uptick with the government shutdown. Of course, both were heralded by around-the-clock hyperbolic news coverage of both sides of the political aisle predicting apocalyptic results if the other side prevailed.

While those two occasions were extreme instances, there seems to be a continuous drumbeat of calamity from purveyors of doom, trying to sell us everything from their political party to gold bullion. I have always found it humorous that gold dealers constantly decry the value of "paper money" compared to gold, but nonetheless seem to be extremely eager to exchange their gold for my dollars.

If the economy continues to improve and more people are able to find work, perhaps there will be a greater convergence of the public's and the economists' perceptions of the economy. But I suspect that as long as we have a 24/7 cable news cycle that thrives on calamity, people will continue to be convinced that things are worse than they really are.

King's column appears Thursday and Sunday. Email King at weking@weking.net and follow him at twitter.com/weking.