Politics colors our perception of the economy, a lightning-rod topic in the 2024 election

Americans view the economy differently based on their political beliefs, and as the 2024 presidential election approaches, the two parties in Minnesota and nationwide are ramping up messaging on the kitchen table issue.

Their takes are vastly different.

Democrats see a good economy, with wage growth, low unemployment and the promise of even more jobs to come.

"We see the inflation, and we shop at the grocery store, and it's like, 'Oh my God, it's so expensive.' But we're not seeing the underpinnings that are happening that are really made to last," said Tess Galati, 82, of St. Paul. "This is a big deal."

Republicans see a bad economy, evidenced by inflation.

"If you're a job seeker, if you want to work and need to work, I think it's still pretty good," said Jim Kwapick, 67, of Mahtomedi. "But is it really a healthy economy? I don't know that it is."

Minnesota DFL Party Chair Ken Martin said there's no doubt the economy is doing better than when President Joe Biden inherited it from Donald Trump in 2020.

"The reality is, people are making more money, more people are working than ever before, and we are seeing record job growth in the country," Martin said.

Still, Martin said, he knows people "aren't feeling great about the economy."

"At the end of the day, people vote on how they feel, and that's something that we as Democrats have to articulate," he said.

Recent polling confirms a large majority of voters don't think the economy is doing well. An October survey from the New York Times and Siena College found 81% of voters in six swing states described the economy as fair or poor, while only 16% said it was good and 2% rated it excellent. That same poll found Biden trailing Trump, the Republican frontrunner, in all but one swing state, with many voters disaffected with Biden's handling of the economy. Only 37% of those voters trusted Biden to do a better job handling the economy, while 59% said Trump would do a better job. Polling from CNN and NBC since the New York Times survey showed Trump also narrowly leading Biden with most of those polled ranking the economy as their top issue.

"If voters really believed that the Biden economy was working, they would want more of it," Minnesota Republican Party Chair David Hann said. "Instead, we see his approval rating is stuck down and not going anywhere."

Whoever is sitting in the Oval Office is crucial to how Americans view the economy.

Data from the University of Michigan Survey of Consumers shows respondents whose preferred party is in the White House expect inflation to be lower. The data does not show the same correlation based on which party controls Congress, said Indiana University assistant economics professor Rupal Kamdar.

And not only are people's future expectations better when the president is a member of their party, their perceptions of the past also change.

"Let's say we look at elections from the 1980s until now: If you look at times when the White House switches political parties, what you'll find is people who are affiliated with the winning party interestingly also think the past year has gone better all of a sudden," Kamdar said. "Everything is kind of filtered through this political lens."

People also tend to view the economy through the lens of their own experiences. Inflation is measured based on a "market basket of goods" for the typical American consumer, "but no one's really typical," said Peter Ferderer, an economics professor at Macalester College.

"If you spend a lot of your money on education or health care, things that have gone up a lot in price in the last few years, you're going to think the price inflation problem is worse than it maybe is," he said. "It depends on your perspective. It depends on what you're spending your money on."

Crystal resident Joseph Micheel, 24, saves aggressively and keeps costs low. He lives with a roommate, shops at Aldi and doesn't have student loans after graduating from a public university. But the auditor, who identifies as a political Independent, can't ignore the rising costs of everything from beer to mortgages and how that is particularly affecting friends who work lower-wage jobs.

"In general, I'd say I think the economy is not doing all that well, even though on the surface it looks like it's doing just fine," he said.

Financial planner Alexander Pengelly, of Excelsior, said he's hearing a lot of recession anxiety, even though a long-expected downturn has yet to happen.

"It feels like on a lot of technical bases, our economy is chugging along really well, but people don't feel happy about it," said Pengelly, 29, who identifies as a DFLer. "And I think that's just this ethereal factor that's out there and dragging people down."

The economy's resilience has exceeded expectations. Labor force participation and consumer spending have remained strong, despite the interest rate hikes the Fed has implemented to tame inflation. Typically, when inflation is high, unemployment is low.

But Americans might not be feeling the effects in their day-to-day lives. According to the Census Bureau, real median household income before taxes declined 2.3% nationally between 2021 and 2022, from $76,330 to $74,580. After taxes, the drop was 8.8%, to $64,240.

At the lower- and middle-income levels, growth has stagnated through time. While the real household incomes of the top 10% of earners rose 163% between 1971 and 2021, the increase for the bottom 20% of earners in that period was just 22%, according to research from Minneapolis Fed economists.

Democrats' messaging centers on job creation and infrastructure improvements aimed at reinforcing the middle class, in part through investments included in the Inflation Reduction and American Rescue Plan acts.

Biden has been traveling across the country to talk about the economy, including a visit to a hog farm near Northfield, Minn., last month to promote billions in sustainability spending for farmers.

"Bidenomics is just another way of saying the American dream," he said during the visit.

But it will take time for those investments to pay dividends. In the meantime, Republicans are zeroing in on the immediate effects of inflation, which has dropped from more than 9% last year to 3.2% in October but remains short of the Fed's 2% target.

That, in addition to state-level tax increases, will be a top theme for Republicans campaigning in Minnesota next fall, said Hann, of the Minnesota Republican Party.

"Ordinary people feel the effect of gas prices at the pump and rising energy prices when they try to heat their home in the winter and mortgage rates when they are being priced out of the market," he said. "You can say this or that indicator, but it doesn't mean anything to people who are trying to live their lives and improve their economic situation."

Which message will land with voters won't be clear until a year from now.

"Certainly, perception is important, because it affects political outcomes," said Ferderer, the Macalester professor. "That's why there's this big battle to control and shape perception."