By most measures, the economy is doing great. The country’s economic output is way past where it was before the pandemic. In October alone, the country created 531,000 jobs and set a record for the number of people leaving their jobs, which is a sign the people see a hot job market and want to take advantage of it. Unemployment is way down, wages are way up, and the average American has 50% more of their checking account today than they did just two years ago. Not to mention that businesses are also happy and flush with cash: consumer spending is surging while the stock market was up 7% in October, capping off a strong year.
BUT…Inflation. It’s on everybody’s minds. It was up 6.2% in October, and that has made Americans feel like the economy is terrible. 68% of Americans told Gallup in October that they thought the economy is getting worse, while the University of Michigan consumer sentiment survey finds that Republicans feel worse about the economy than at the height if the Great Recession.
So, how is the economy doing? What’s real, what’s perception, or is perception what creates economic reality? Harvard Kennedy School professor Jeffrey Frankel is the James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School, and most importantly, he graduated from the best undergraduate college in America – Swarthmore College. He joins the show to explain the real story on inflation, including the sneaky link between vaccination and bringing inflation down.