The insurgent presidential bids of Donald Trump and Bernie Sanders have roused Americans who are angry and anxious about an economy that they feel has left them behind.
Most economists have a brighter view. They say that while many people haven’t benefited much since the recession ended, a stronger economy lies ahead.
An Associated Press survey this month of nearly three dozen economists found that a majority thinks the United States remains resilient enough to defy a global slump and the sinking stock markets that have raised fears of a new U.S. recession. With job growth solid, higher wages and spending should offset global threats and support growth, they say.
A majority said they thought stock investors have overreacted to sharply lower oil prices and a slowdown in China. They foresee only a 19 percent chance that the U.S. economy will fall into recession within 12 months.
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Perhaps most notably in a political season that has sparked a polarizing debate on immigration, the economists overwhelmingly described legal immigrants as a plus for the economy. They note that immigrants are disproportionately young and help expand the workforce, which fuels growth. And immigrants are more likely to start businesses than Americans as a whole are.
Yet according to a Gallup survey released this month, Americans are more likely to name the economy as the country’s top problem than they are anything else. A quarter of those surveyed listed their chief concern as either the economy in general or unemployment and jobs.
Other polls have found that a majority of Americans even think the economy remains in recession, even though the Great Recession officially ended in June 2009.
So what explains the gap between the optimism of economists and the anxieties of voters?
For one thing, sluggish pay growth means many people are struggling even as broad gauges of the economy are improving.
For another, the economic recovery, which followed a devastating recession, has been unusually slow. Many people feel they’ve yet to regain their former living standards. In addition, some parts of the country haven’t recovered as well as the nation as a whole has.
“I can say the economy is in good shape, but I can understand why many people are ticked off and say it’s not, because their wages haven't grown,” said Joel Naroff of Naroff Economic Advisers.
The typical household’s annual income sank during the recession and didn’t regain its pre-recession level until November 2015, according to Sentier Research. That’s a much slower, more painful pace than occurred after previous recessions.
“It's been six or seven years, and we’re only now where we should have been after two years,” said Tim Hopper, chief economist for TIAA-CREF. “We have not seen the typical growth rates in income and employment.”
Joe Brusuelas, chief economist at RSM, noted that the recovery has occurred unevenly around the country. Falling oil prices have brought widespread layoffs in oil-producing states. But high-tech hubs like San Francisco, Denver and Salt Lake City are booming.
More than 50 million Americans live in areas that kept losing jobs and businesses through the first half of the recovery, according to a report by the Economic Innovation Group, a bipartisan think tank backed by Silicon Valley entrepreneurs.
Hiring, income and business growth has been concentrated in wealthier ZIP codes, the report found. In the median-income ZIP code, job growth matched only half the pace of the national average.
The AP surveyed a range of corporate, Wall Street and academic economists from Feb. 17 through 24. Among the findings:
▪ Immigration has been a ferociously contentious issue in the Republican presidential race, but economists were unanimous: Every one who responded to the AP’s survey favored opening doors rather than building walls to legal immigration.
Immigrants who graduate from U.S. universities and remain in the country “are amazingly productive members of society, starting new, innovative companies,” said David Berson, chief economist at Nationwide Insurance.
The economists also see legal immigration as offsetting the impact of an aging U.S. population and rising retirements — trends that have reduced the proportion of American adults who either have a job or are looking for one.
“Otherwise, we are going to have an incredible number of people taking Social Security and Medicare and a smaller and smaller number of people providing for them,” Berson said.
▪ Most of the economists agree with Sanders’ view that some mega-banks remain “too big to fail” nearly nine years after the financial crisis erupted and almost buried the U.S. banking system. If the economists are right, taxpayers might again have to bail out some Wall Street banks in case of another financial crisis.
▪ Nearly half agree with an argument common among Republicans: that corporate and banking regulations implemented by the Obama administration have slowed growth. New regulations tend to increase uncertainty about the economy, several economists said in interviews.
▪ The economy will expand 2.3 percent this year and 2.4 percent in 2017, according to the analysts’ average forecasts. That’s about the same modest pace that has existed since the recession ended.
▪ Two-thirds say the monthly jobs report, which has shown robust gains for two years, is a better gauge of the economy’s health than the quarterly report on gross domestic product is. GDP growth has remained unusually low relative to the pace of hiring.
Most economists expect consistently healthy hiring to continue to reduce the unemployment rate, already a low 4.9 percent — a dynamic that should raise pay for more Americans as employers struggle to find enough workers.
“People will be a lot happier then, and the raises will be better than what they have seen recently,” Berson said.