- The Washington Times - Thursday, June 22, 2006

The last installment of the American Survey (May 26, 2006) analyzed the disconnect between strong objective economic indicators and poor public perception. Why, if the economy’s doing so well, do so many feel bad about it? That piece argued that partisanship represents one explanation: Democrats’ negative view of the economy pulls the numbers down more than Republicans’ positive perception boosts them up.

But partisanship is only part of the answer. A second contributor is New Economy Angst, a sense of cascading vulnerability triggered by the September 11 terrorist attacks, the bursting high-tech bubble, the accompanying stock-market collapse and the revelation of corporate scandals — all plaguing the U.S. economy and voter psyches at the beginning of this new century. These factors, along with regular news reports focusing on the costs and risks of globalization with less emphasis on the benefits, all lead to a heightened sense of economic gloom and anxiety. As the first chart below reveals, even as the economy began to steadily improve around the beginning of 2002, voters’ perceptions never recovered.

It’s as if the collective impact of these events reminded Americans that even if circumstances are good today, change can occur rapidly — maybe even more quickly than in previous generations. Certainly the speed of technology and its impact on business decision-making is also part of the equation. As someone said recently, a corporate choice to relocate or change a manufacturing facility used to take months or even years to advance. Today those decisions are sometimes made overnight.

Moreover, the connection between job creation and economic growth seems more tenuous than in the past. As Bruce Stokes wrote recently in National Journal, in each of the last three economic recoveries, job creation has been successively slower. Mr. Stokes writes, “The job machine is slowing because technological and management innovations, and an increasingly skilled coterie of workers, have boosted productivity without requiring employers to add to their workforce.” Taken together these factors contribute to a growing sense of vulnerability about American jobs and the security of the employment.

We asked voters in the last American Survey (conducted May 30-June 3, 800 registered voters, margin of error 3.5 percent) if they thought most Americans today feel they have more, less or about the same amount of job security than they had 10 years ago. The overwhelming majority — 81 percent — answered “less.”

Understanding this new economy angst offers a key to connecting with voters. Trumpeting the good economic statistics without appreciating how this new sense of vulnerability impacts Americans could make public officials seem hopelessly out of touch. Understanding this new angst helps sort out the disconnect between strong numbers and weak perceptions.

In the final installment of this series, a third variable contributing to a weakening link between economic statistics and perceptions — lifestyle inflation — is explored.

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