It’s a Myth That Americans Don’t Understand the Economy

We look to be headed for what could be the most unpopular sequel since “Home Alone 3”: Biden versus Trump 2.0.

One question goes to the heart of shaping expectations for that matchup: Why does everyone think the economy stinks? The answer is critical, given that this election is probably going to be close and that a variety of research suggests that the incumbent party’s chances are better when the economy is going well. President Biden, trailing Donald Trump in early polls, will need all the economic tailwind he can get.

Many commentators on the left have focused on a purported gap between what they see as objective data signaling a strong economy (in particular, persistently low unemployment) and middling to poor consumer sentiment, as in the University of Michigan’s monthly survey. This gap is sometimes attributed to partisanship — Republican voters being unwilling to give any credit to Mr. Biden — and at other times to media bias or misinformation driven by social media.

But a more careful look at the numbers reveals a different answer, and it requires no great mystery to solve, no inexplicable gap in the data.

Consumers don’t think the economy stinks. Rather, they quite rationally have mixed feelings about this economy — and they’ll reveal different things depending on exactly what you ask them.

They are pessimistic about the future, but that’s a matter of prediction, not misinterpreting the current economic situation. And here’s the good news for Mr. Biden: They’ve noticed that the data has been improving.