What are Americans Saying about the Economy?
The elections are over and the verdict is out (sort of). There was a little bit of everything in this election to make people everywhere feel good about the outcome in some way, mixed in with things to be concerned about. These mixed results are making the post-election spin a little tricky for both politicians and pundits alike, which is honestly somewhat refreshing. One statement we are very comfortable standing behind a week after the election is that there are still many issues that hang in the balance. While this was one of those moments in American political history where predictions ranged from one end to the other with results that surprised many of us, the one concern that is not going away any time soon is the economic and financial well-being of our fellow citizens.
Similar to this year’s election results, the American economy is in unchartered territory. Inflation is way up; unemployment is down. There seems to be a new mass layoff in the tech world every week, while the other industries are sorely understaffed. GDP growth is low or negative, but job creation up. What on earth are we supposed to do with this information in order to move forward?
In our effort to unpack the way Americans currently feel about the economy and their own economic situation, we have been asking a representative sample from our national panels about these very topics. Using straightforward questions gauging how people feel about their own situation over the past year has enabled us to break down responses into three categories and predict probabilities based of how they might respond given their age, gender, and other demographic factors. These results give insights into how demographics have a large influence on a person’s perceived (or actual) personal economic status.
While there were many interesting findings here, the following are the key takeaways that jumped out to us as we were analyzing the data.
Women have a much more negative view on their own personal economic situation, and it is not driven by marital or job status.
Women are much more concerned about household needs and the ability to provide healthy food, while less concerned about education costs, investments, and reduced family time.
There is a distinct divide in economic perception based on household income. The existence of the divide was not a surprise, but the dividing line was.
Women have a much more negative view on their own personal financial situation.
Half of the women in our sample said that their economic situation worsened over the last year, with about one-third reporting that it remained pretty much the same and only 12% saying that it became better. On the other side, 40% of men said they did better over the last year (more than three times higher than women), while roughly 3 in 10 said their situation stayed about the same and a similar number said they were worse off.
Interestingly, these differences between men and women are generally consistent when considering other factors. For example, among married men, about one-third think they are better off now compared to a year ago and roughly the same think they are worse off. Among married women, we find that just under half feel that things are worse for them now economically.
Studies have indicated that the lack of available flexible work options and affordable childcare have put a larger stress on women and has created a diminishing presence in labor participation for women as well. It is likely that this is also affecting the economic view of women in general, as pressure continues to increase at a higher rate for women compared to the same pressure experienced by men.
Not surprisingly, if you are currently employed, you tend to have a better overall view of your economic situation. This viewpoint holds, regardless of occupation; if you have a job, you are more shielded (at least mentally) from being affected by all the ups and downs of the economy. If you happen to be unemployed or retired, the view is not as rosy, with about half of this cohort feeling that their condition worsened over the last year. When breaking down the reason for not having a job, it is not about being unemployed and has more to do with age and or caregiving status. Indeed, about 2 in 5 unemployed Americans say their situation is now worse, but that is 15 percentage points lower than those who are retired and 10 points lower than people who are at home as a caregiver.
Women are much more concerned about household needs and healthy food and are much less concerned about investments, educations costs, and reduced family time.
As part of our efforts to understand how Americans are feeling about the economy, we asked panelists to rate on a scale from zero to 100 how concerned they are about a set of economic issues. These issues ranged from the ability to meet basic household needs due to rising costs all the way to the retirement investments, and so forth. Overall, on average, Americans’ largest concerns are about meeting household needs, the increasing costs of healthcare, the ability to pay for healthy food, and the value of retirement investments.
Not surprisingly, there were many differences in opinion based on the demographics of the respondent; however, some of the bigger differences were based on gender.
As far as the overall ranked order of concerns goes, men and women don’t feel vastly different about the ten different areas of concern we asked them about. However, there are some differences that hint at where spending decisions fluctuate and who takes the lead when it comes to certain household financial decisions. By far, the largest concern for women is being able to meet expenses related to household needs. Not only did this issue rank seven (7) points higher than their next highest concern, but it also ranked seven (7) points higher than men’s ranking, even given the fact that it is the largest concern overall for both genders. Increasing healthcare costs, putting healthy food on the dinner table, and meeting rent/mortgage costs are the other top areas of concern for women. Retirement/non-retirement investments and recreation received more attention from men, who said that about one-third of their concern stems from these aspects of life. Reduced family time ranked the lowest of these issues for both women and men alike.
Demographics such as employment situation, education level, and household income hold some of the keys to how people are feeling.
Income level also has a strong effect on how you view your economic situation (which is not exactly shocking). Just over half the of the lowest income group say that their condition has worsened, while about two-thirds in the richest group say that their financial situations have improved over the same time period. Those earning around the most recently reported national median income of $65,000 per year did not fair too well either, with only 1 in 5 saying that their conditions improved and nearly every other person saying that did worse in the past year.
When it comes to education, we also see some interesting results. Among those with a college degree, about 2 in 5 (41%) say things have gotten worse for them in the last year. This is a similar number to reports from those without a degree (46%). While a plurality of both groups reported having a bad last year, the difference is in the concentration of those who feel things have improved compared to those who feel the past year was a step in the wrong direction. Just 13% of those without a degree said things got getter for them economically - that number is double among those with a degree.
Also interesting was the fact that BIPOC Americans reported an overall better year compared to white Americans. Although slightly more white Americans reported being better off since this time last year (25% vs. 19%), a slightly higher percentage of BIPOC Americans said they are either better off or things are about the same, while white Americans reported being slightly worse off in comparison (43% vs. 39%).
Looking into the future
If you thought the last year was fun, it’s not looking much better for 2023 and 2024. Utilizing this data allowed us to look at what the predicted results for the future looked like based on variables such as gender, age, race, area (urban, semi-urban, or rural), income, and party affiliation to see what the probabilities are when it comes to perceptions of their personal economies and whether Americans feel they will move in a more positive or negative direction. Our results show that the general sentiment is bleak.
Our analysis based on probabilistic modelling showed that 37% of the time, people will report that their conditions have worsened, with the good news being that roughly the same odds occur for staying the same if not doing better. Said in another way, the most likely outcome for the next few years is a very mixed economic view.
One of the better predictors occurs when looking at age. The older you are, the higher the chances are of saying that you are doing worse economically. At the age of 20, there is an almost even chance that a person will feel that they are doing better economically, staying about the same, or doing worse (with a slight edge to doing about the same). As we move up the age scale, the chances of that view of falling behind continues to increase, peaking with those who are 70 years old, where there is a 2 in 5 chance they will feel things are going worse for them.
While this exercise was not set up as a political study, there is a strong relationship between how age cohorts are viewing their economic situation and their vote. The younger you are, the higher likelihood that you will think you are doing at least OK economically. There is then a steady increase in economic anxiety as you move up the age scale. When we look at the exit polling from the election last week’s we see the same pattern when it comes to support for the parties. Those under 30 had the highest concentration of Democratic voters and the concentration steadily decreased as you move up the age scale.
While this analysis is far from complete, it does appear that age is the once demographic where we see this relationship between views on the economy and the voting propensity. When it comes to gender, the likelihood that a woman will say she is worse off economically is above 40% while men are hovering about a 25% chance. The reverse is true when it comes to being better off, where there is a 36% chance that a man will say they are better off now, compared to just 24% of women.
If the vote propensity for gender would follow the patterns of age, we would expect to see men more likely to vote for Democratic candidates and women to lean towards Republican candidates. However, this is not the case. Indeed, most women (53%) voted for the Democratic candidate according to exit polls, while just 42% of men voted the same way.
While social issues such as reproductive rights have a strong effect on voting behaviors, there is also a partisan differentiation when it comes to economics. Democratic men are most likely to report that they are better off economically and the least likely to say they are worse off. Democratic women are less likely to say they are worse off compared to Republican women (33% vs. 50%) and are just as likely to report that they are better off than Republican men (28% vs. 29%).
Looking into the future, it appears that self-reported assessments of our economic situation will continue to challenge reforms in the face of tightening monetary policy, the near end of COVID-19 relief programs, and an ever-changing ecosystem governing American spending. Matching the economic mood of Americans will certainly be the key to success for political parties and candidates moving forward. This will create a tough catch-22 for the White House, since talking up the economy is important for whoever is in the West Wing but threatens to miss the mark if it does not match the mood of the electorate. Further complicating the messaging is that matching the mood means very different things for different age groups, as well as education and income levels. As it doesn’t look like mixed views on the economy are going away anytime soon, this data will become more important than ever.
