While underlying indicators remain strong, Americans remain broadly skeptical of the country’s economic outlook, two Western Washington University professors told a collection of Lewis County government officials and business leaders Thursday.
The Economic Forecast, organized by the Economic Alliance of Lewis County, included a presentation by professors Hart Hodges and McCafferty at The Loft in Chehalis. There, the pair of economics professors said a stable unemployment rate, cooling inflation, less fear of an imminent recession and an increase in consumer spending count as positive signs the U.S. economy remains healthy.
Part of the reason for the discrepancy, McCafferty said, is people can experience different economies depending on their age or their stage in life.
“You could probably find a lot of people who say, ‘yeah, it feels more and more like a recession. I can’t meet all of my bills, I can’t get a raise, and so on and so forth. It’s a tough time,’” McCafferty said. “Meanwhile, other people are saying, ‘I need a new plane.’”
On Friday, the U.S. Bureau of Labor Statistics reported that the country added 254,000 jobs in September and that the unemployment rate remained steady at 4.1%. A rate hovering around 4.5%, Hodges said, is typical, as it allows for employment mobility and serves as a market pressure to increase wages.
Nationally, economists also remain bullish about the country’s economic standing.
“There’s really nothing that I can point to in the economy that suggests that a downturn is more likely than it is at any time,” Jerome Powell, chairman of the Federal Reserve, told reporters earlier this week.
The country has seen cooling inflation following a pandemic-era spike, though some inflation remains positive.
“We want some inflation. Inflation itself is not necessarily evil. Inflation is what allows you to get raises. It allows for growth in the economy, right? Inflation is not a bad thing,” McCafferty said. “Inflation itself is not a bad thing. But eight or 10 percent? Not so good.”
While indicators remain strong, the numbers can be misinterpreted. In September, The Bellingham Herald reported the city’s median income dropped by $12,000 in 2023 and poverty increased by 54%.
The data suggested a dramatic decline in economic stability in Whatcom County. However, McCafferty said previous increases in median income and declining poverty rates resulted from fewer responses to the U.S. Census Bureau, skewing the data.
“We are not saying ‘ignore the data,’” Hodges said.
“Understand the data,” McCafferty added.
Broadly, Americans also remain more confident with their economic standing than they are with the country. According to the professors, about three-quarters of Americans report being financially stable, while around a third say the country has a positive financial outlook.
“That’s not statistically possible,” Hodges said.
“I’m doing fine, but I’m worried about my neighbor,” McCafferty said.
The trend isn’t a new phenomenon but has grown increasingly more drastic, which can color consumers' spending habits and decisions.
“This is the biggest discrepancy we’ve had since the really high inflation periods of the early 80s,” Hodges said.
Though the professors said they couldn't pinpoint the reason for this effect, they suggested it could be the result of social media. The trend, though, remains steady when factoring in wage data or education level.
One of the theories, Hodges said, is a concern among some that they will not achieve the same milestones as the generations that came before them. According to Hodges, 90% of the babies born in the United States in the 1940s did better financially than their parents.
“It used to be that if, essentially, you were born in the U.S., you could assume you’d have more income, a bigger house, whatever, than your parents,” Hodges said. “Just by being born in the U.S.”
According to the professors, a decline in U.S. manufacturing and an increase in automation have resulted in fewer avenues to economic stability in some regions of the country. Americans in the Rust Belt, where many of the factories shuttered, report being less optimistic about the country’s economy.
The national trend is also present in Washington. With about 33,000 Boeing workers on strike, Snohomish County, home to the company’s largest manufacturing plant, is less optimistic than neighboring counties.
Part of the decline in manufacturing can be traced back to increased globalization and outsourcing jobs to foreign markets, Hodges said.
“Gains from trade went to a handful of folks, the pain went to a lot,” Hodges said.
But the country has also increased manufacturing. America’s manufacturing sector was more productive in 2019 than it was in 1979, according to Hodges.
“We just did it with a third of the workers,” he said.
For employees who managed to maintain their manufacturing jobs, their wages began lagging behind those in other sectors, which Hodges said resulted in “a lot of disgruntled people.”
“And if you’re in those communities that were really dependent on manufacturing, and the manufacturing opportunities are going down, and the ones that are still there don’t pay as well, maybe you move,” Hodges said.
