Within the blurred lines of politics and economics, a lot of nonsense masquerades as economic analysis. Our grossly partisan atmosphere has only exacerbated the confusion. Partisans like to spin current economic metrics in a way most flattering to their preferred camps. The biggest impediment to building a credible coherent economic analysis is addressing the false duality of the Red versus Blue team economic management arguments.
First, let’s admit policy is hard. There are significant lags between recognizing issues in public policy, debating a solution and implementing an actual change. This could take weeks, months or even years. Thus, the effects of policy changes championed by a particular administration can take decades to fully materialize. Similarly, unintended consequences can manifest instantly or well after implementation. To add to the confusion, policy preferences change within the major parties over time. In short, we must try to isolate the results of specific policies over time instead of viewing economic management in an arbitrary partisan dichotomy
Politicians run for office promising to fix things and make our lives better. If politicians ran on a platform of keeping things the same, with no vision for substantial changes, they would surely lose. This creates an environment in which problems are often elevated and exaggerated while positive news is often obfuscated for partisan gain. Unfortunately, it’s easy to lose track of the good news. For example, real median household income is at an all-time high. Poverty rates have been declining nationwide, loan delinquency rates remain near all-time lows and the oft-cited decline in the middle class has been mostly a result of families moving into higher income groups, not falling behind. Additionally, charitable giving among Americans has reached a record high. There is no heaven on earth, but our economy is arguably in far better shape than most of the developed world.
Current economic data suggest recession fears are premature. For starters, indicators such as the inverted yield curve have historic precedent for predicting a recession; however, such a downturn can happen years after the initial inversion. In economic forecasting past performance remains the best predictor of future performance, but our relationship with the past can fray the further into the future we go. Traditional metrics must be subjected to constant evaluation in the context of dynamic changes within our economy. Similarly, a slowdown in job growth could signal an economic downturn or just as easily be a byproduct of prolonged low unemployment and shrinking labor pools. Furthermore, we tend to overly emphasize monthly national employment reports that are almost always revised with little focus on the regional conditions closer to home.
Public policy is rarely black and white. No president has a magic wand that guarantees favorable economic metrics. No party has a monopoly on good or bad policy. To elevate our national policy discussion, Americans must resist political tribalism.