For anyone still worried about a recession, it might be an appropriate time to exhale. This week brought the latest report on Gross Domestic Product (GDP) for the U.S. and to briefly summarize, it showed significant progress. This measure of the collective goods and services produced in the U.S. often serves as a benchmark for assessing economic growth. The recent GDP report showed a robust economy that has managed to grow despite rising interest rates, persistent inflation and other troubling macroeconomic trends. In fact, the U.S. demonstrated the fastest quarterly growth it’s seen in almost two years. That’s not something to ignore.
For President Joe Biden, the third quarter’s GDP report is a major win, and it should be. But even as this victory dominates news cycles, it’s clear that Americans still don’t see it that way and aren’t eager to credit the president for his policy achievements. This is worth taking a closer look at.
The GDP Report in Context
Biden not receiving credit for economic growth didn’t begin with the recent GDP report. A quick study of recent media coverage reveals a lot of stories with the same thesis: the president’s policies are working, but many voters aren’t noticing. A recent Insider headline illustrates this well: “Biden’s economic policies have quietly made peoples’ lives better — and no one seems to care.”
The operative word in that sentence is “quietly.” But it’s hard to ignore it when a GDP report shows such clear progress, especially in a year marked by troubling economic trends. As CNBC reports:
“Gross domestic product, a measure of all goods and services produced in the U.S., rose at a seasonally adjusted 4.9% annualized pace in the July-through-September period, up from an unrevised 2.1% pace in the second quarter, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had been looking for a 4.7% acceleration in real GDP, which also is adjusted for inflation.”
The outlet attributed this bump to increases in consumer and government spending, as well as residential investment and increased inventories. Michael Arone, a chief investment strategist at State Street Global Advisors, noted that the GDP report largely confirmed what experts already knew and, therefore, isn’t likely to lead to an overreaction in markets. In sum, investors can regard this development as positive and likely don’t have to be concerned about a stock market crash in the near future.
It’s Not “The Economy, Stupid”
All that sounds like good news, and it is. But if the U.S. economy is making this type of clear progress, why aren’t most Americans noticing it and reacting accordingly? Recent polls make it clear that the success of “Bidenomics” isn’t helping the president’s approval rating, suggesting that the general public doesn’t credit him for this economic growth.
Economist Robert Reich, a former Secretary of Labor, recently addressed this topic in a blog post. He noted Biden’s important focus on the clean energy and infrastructure sectors as a means of spurring job creation but also highlights two key problems: that the far-right media has worked hard to spin a narrative discrediting Biden’s economic accomplishments and that the Biden administration struggles with messaging.
Some might argue that Americans simply aren’t seeing the results of Biden’s economic policies in their everyday lives. But the areas that Reich noted in the tweet above highlight some important factors. It’s hard not to notice jobs being created, especially when they stem from government investment in areas as important as clean energy and infrastructure. Recent data demonstrates that jobs in these sectors have been rising steadily. To reference a report from NBC News earlier this month:
“The U.S. added about 336,000 jobs in September, nearly twice the Dow Jones prediction of 170,000 jobs and above the monthly average of 267,000 jobs over the past year, according to the newly released report by the Bureau of Labor Statistics. The unemployment rate in September stayed the same at 3.8%.”
It’s clear when it comes to public policies spurring economic growth, the data is on Biden’s side. And since numbers don’t lie, it appears that many Americans aren’t seeing the results because misleading information continues to abound. Earlier this year, economist Paul Krugman stated that he believes “narratives conveyed by the news media” tend to strongly impact how people view the economy.
But It Is Complicated
Other experts, such as Patriot Millionaires chair and financial sector veteran Morris Pearl, have also called out the media for misleading narratives on economic matters. When I spoke to Pearl last week, he laid out the problems that he sees with a recent piece from the Washington Post Editorial Board on the dangers of the national debt.
The underlying takeaway from the response to the GDP report is that misleading media narratives can sometimes overshadow public policy progress. But numbers don’t lie, and as noted, in this case, they are on the side of the Biden administration. Economic growth is showing, and it should reassure anyone with concerns.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
