Vibes, the Economy and the Election

The Fed chairman, Jerome Powell, on Wednesday.Credit…Brendan Smialowski/Agence France-Presse — Getty Images

Vibes, the Economy and the Election

By Nate Cohn

A Federal Reserve announcement about the future of the funds rate is not the sort of news that would typically factor into analysis of public opinion and the economy. Usually, analysts look at numbers like gross domestic product and unemployment, not something as arcane as a federal funds rate.

But this isn’t a normal economy, and public opinion about the economy hasn’t been normal, either.

For two years, the public has said the economy is doing poorly, even though it appears healthy by many traditional measures. This has prompted a fierce debate over whether the public’s views are mostly driven by concrete economic factors like high prices or something noneconomic — like a bad “vibe” brought on by social media memes or Fox News.

The Fed’s projection Wednesday that it will cut rates three times over the next year probably won’t generate TikTok memes, but it’s exactly the kind of event that may ultimately resolve this debate one way or another — with important and potentially decisive consequences for the 2024 presidential election.

To cut right to the heart of the problem underlying this debate: High prices do not seem to fully explain why voters are this upset about the economy.

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