In addition, the share of workers who are not employed and not looking for work due to disability or illness is higher than its pre-pandemic trend.ĬOVID has clearly had harmful effects on the U.S. Other work has shown that more working-age adults are reporting serious difficulty remembering, concentrating or making decisions, and the increases are higher among women and non-college graduates. My research with Evan Soltas estimates that excess COVID-19-related absences from work through mid-2022 resulted in approximately 500,000 fewer people participating in the labor force. The COVID-19 pandemic disrupted many sectors of the economy, including labor markets. Gopi Shah Goda, SIEPR Senior Fellow and Professor (by courtesy) of Economics, School of Humanities and Sciences: The partisan factors we document may intensify as the November election approaches. How consumer sentiment will trend, and what we should be making of these data in the current environment, are questions that will only be fully answered in the course of time. The rise of social media as a prominent information source - with its tendency to amplify bad news - may be fraying the link between economic fundamentals and consumer sentiment.

These are challenging times for forecasting. This means that, if inflation continues to ease over the next 12 months, sentiment should improve as the post-pandemic inflation surge recedes. However, we also found that the downward drag from inflation has a half-life of about a year. While prices rose only 3.2 percent this year, they increased by a cumulative 18.6 percent over the last 3 years, and these prior price increases are still weighing negatively on consumers. Second, consumer sentiment is being dragged down by prior years’ inflation. While both Democrats and Republicans rate the economy more strongly when their party controls the White House, Republicans cheer louder and boo harder, in effect, drowning out Democratic voices and artificially depressing consumer sentiment. First, sentiment isn’t as bad as the numbers suggest due to partisan skew. Ryan Cummings, a visiting PhD student at Stanford, and I recently dived into the data and documented two new findings. Given the strong correlation between consumer sentiment and election outcomes, it’s especially important to understand why there’s a disconnect ahead of this November’s vote. Yet consumer sentiment is decidedly weak, with measures of the economic indicator at levels last seen during the global financial crisis. economy is strong by all objective measures, with low unemployment, robust GDP growth, and easing inflation.

Shultz Fellow at SIEPR and Professor of Economics, School of Humanities and Sciences:

Stanford King Center on Global Development.

Stanford Environmental and Energy Policy Analysis Center (SEEPAC).

Stanford Center on China's Economy and Institutions (SCCEI).

California Policy Research Initiative (CAPRI).

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