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Speaker 1: A report from Goldman Sachs says the odds of a

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Speaker 1: US recession over the next twelve months are now down

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Speaker 1: to fifteen percent, which falls in line with the historical

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Speaker 1: average for any year. Goldman's SAX officials are calling this

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Speaker 1: a soft landing, which means bringing down inflation without an

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Speaker 1: economic collapse.

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Speaker 2: If you look at the data about the US economy

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Speaker 2: right now, it's not looking so bad. Inflation appears to

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Speaker 2: be easy, Unemployment is at a record low, and forecasters

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Speaker 2: now say the chance of a recession in the next

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Speaker 2: year is much lower than before.

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Speaker 3: We are an incredibly unpredictable economy, so many of the

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Speaker 3: rules have gone out the window. One of the dominant

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Speaker 3: economic theory is that to bring inflation down you have

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Speaker 3: to have a huge number of people lose their jobs.

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Speaker 3: That just hasn't happened. Unemployment rates still near record lows.

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Speaker 3: We're still adding jobs in the US economy.

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Speaker 2: But when it comes to how people actually feel about

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Speaker 2: the economy, it's a very different picture.

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Speaker 4: What they see is that things are getting more expensive,

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Speaker 4: and then now at the same time they're also seeing

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Speaker 4: interest rates go up, so for their debt, for their

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Speaker 4: car loans. If they're trying to buy a home, so

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Speaker 4: it's sort of a double whammie right now, and a

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Speaker 4: lot of people expressed a lot of stress and frustration

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Speaker 4: and just feeling like it's harder than ever to make

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Speaker 4: their budget and to say for the future.

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Speaker 2: Bloomberg Senior economics writer Sean Donnan and Bloomberg Personal Finance

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Speaker 2: reporter Claire Ballentine are back to tell us how the

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Speaker 2: middle class is feeling about the economy, according to data

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Speaker 2: from their new poll with Harris. I'm Nancy Cook today

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Speaker 2: on the Big Take. The economy is looking up, so

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Speaker 2: why is the middle class so down? Thanks so much

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Speaker 2: for joining us, Sean and Claire. I appreciate it.

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Speaker 3: Thanks for having us. Yeah, excited to talk.

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Speaker 2: The last time we checked in with you, it was

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Speaker 2: about how a frustrated middle class will play a huge

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Speaker 2: role in the twenty twenty four presidential election. What have

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Speaker 2: you uncovered in your recent reporting, Sean.

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Speaker 3: Yeah, So we've been using the Harris Poll and they've

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Speaker 3: been very kindly running some questions tracking the kind of

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Speaker 3: economic mood of the American middle class. And we've been

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Speaker 3: doing that for a year now, and what we see

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Speaker 3: is two things. One a persistent stress and anxiety in

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Speaker 3: the middle class. In fact, we've seen a growing number

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Speaker 3: of middle class Americans saying they're stressed about the economy.

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Speaker 3: And the second thing that we're seeing is a little

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Speaker 3: bit of a rotation in terms of the things that

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Speaker 3: they're stressed about. So we know that a lot of

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Speaker 3: American households have been hit hard by inflation that at

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Speaker 3: one point hit forty year highs in the last couple

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Speaker 3: of years. But now we're starting to see people get

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Speaker 3: stressed about the higher interest rates have been brought in

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Speaker 3: by the Federal Reserve and that are starting to affect

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Speaker 3: their household budgets in a much bigger way. And our

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Speaker 3: latest polls showed a majority, actually fifty seven percent of

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Speaker 3: Americans said those interest rates, those higher interest rates were

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Speaker 3: having a negative impact on their household finances.

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Speaker 2: You're right that the spring of twenty twenty two was

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Speaker 2: a turning point with the wealth held by the middle class.

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Speaker 2: What happened at that particular time.

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Speaker 3: Well in March twenty twenty two, is when the Federal

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Speaker 3: Reserve starts raising interest rates to combat inflation. And what

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Speaker 3: we had seen in the decade and slightly more than

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Speaker 3: that ahead of time was this amazing wealth accumulation by

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Speaker 3: the American middle class. It's really a pretty unique decade

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Speaker 3: in American economic history. And in March of twenty twenty two,

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Speaker 3: as interest rates went up, stock markets reacted. We've seen

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Speaker 3: that flow through into the housing market, and we've actually

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Speaker 3: seen the wealth of the middle class go down since then.

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Speaker 2: And Claire, can you tell us about the people you

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Speaker 2: spoke with for the story. What did you learn about

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Speaker 2: their level of stress about the economy?

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Speaker 4: Yeah, so, I think the big takeaway from talking with

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Speaker 4: some real people on the ground dealing with these issues

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Speaker 4: is that despite measures of inflation decreasing, the picture is

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Speaker 4: getting better. People on the ground don't really see that

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Speaker 4: and feel that what they see is that things are

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Speaker 4: getting more expensive. And then now at the same time,

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Speaker 4: they're also seeing interest rates go up, so for their debt,

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Speaker 4: for their car loans, if they're trying to buy a home.

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Speaker 4: So it's sort of a double whammie right now. And

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Speaker 4: a lot of people expressed a lot of stress and

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Speaker 4: frustration and just feeling like it's harder than ever to

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Speaker 4: make their budget and to save for the future.

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Speaker 2: And can you tell us about who some of these

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Speaker 2: people are? Are they young? People, old people. Where do

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Speaker 2: they live? Claire?

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Speaker 1: Yeah.

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Speaker 4: So, one woman that I talked to is a mom main.

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Speaker 4: She's a family law attorney, forty seven years old. She

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Speaker 4: talks about just how hard it is to buy enough

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Speaker 4: food for her growing family without breaking the budget. She

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Speaker 4: talks a lot about how difficult it is to save

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Speaker 4: for the future and just to make all of the

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Speaker 4: ends meet. You know, she sees rise and costs for

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Speaker 4: nearly everything happening right now. And at the same time,

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Speaker 4: she works in a small business and is worried about

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Speaker 4: the ability of other people to pay her for her

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Speaker 4: services and how that will affect her livelihood moving forward.

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Speaker 4: I also talked to Rebecca Acuna. She's a twenty eight

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Speaker 4: year old mom who's living in Indianapolis. She works as

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Speaker 4: a paralegal. She estimates that she's spending two hundred dollars

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Speaker 4: more per month on groceries than she did a few

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Speaker 4: years ago. Also has a higher utility bill and wants

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Speaker 4: to replace her car that's super old, but with higher

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Speaker 4: interest rates, she's going to put that off for longer.

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Speaker 2: Economists are feeling pretty upbeat about the economy at this point,

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Speaker 2: are more upbeat, you know, they're saying that we've avoided

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Speaker 2: a recession, which you know historically we're sort of on

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Speaker 2: track to have had by this point or have next year.

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Speaker 2: But the people that you talk to for this story

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Speaker 2: are feeling really down in the dumps about the economy. Sean,

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Speaker 2: can you talk to us about why there is this disconnect?

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Speaker 3: Yeah, and there's this huge disconnect, and that has to

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Speaker 3: do with what economists look at in terms of the

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Speaker 3: aggregate economy. We've seen growth hit four point nine percent

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Speaker 3: in the third quarter of this year, which incredibly fast

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Speaker 3: historically for the US economy. We've seen inflation coming down,

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Speaker 3: but there's a big gap between what economists look at

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Speaker 3: and what you and I or anyone really looks at

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Speaker 3: when it comes to their own personal economies and their

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Speaker 3: household budgets every month. And the reality is inflation has

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Speaker 3: come down, but that's just the rate of increase of

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Speaker 3: prices that has come down. Prices haven't come down at all.

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Speaker 3: And the middle class really feels that you are paying

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Speaker 3: more today to do the things you need to do

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Speaker 3: as a middle class family than you were just a

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Speaker 3: couple of years ago, and that is consequential. You see

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Speaker 3: the impact of interest rates, you know, if you're sending

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Speaker 3: a kid off to college today, you are paying higher

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Speaker 3: interest rates on student loans. As Claire said, if you

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Speaker 3: want to go buy a car, you're going to be

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Speaker 3: paying seven to eight percent, maybe even higher depending on

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Speaker 3: your credit score for a loan. If you want to

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Speaker 3: get a mortgage, if you want to move, if you

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Speaker 3: want to take advantage of a job opportunity, you again

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Speaker 3: have this kind of barrier of Okay, well, I may

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Speaker 3: have to give up my low interest rate mortgage to

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Speaker 3: go pursue this great job opportunity. Claire and I have

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Speaker 3: been talking to people over the past year, and we're

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Speaker 3: going to be tracking them through the election next year.

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Speaker 3: And I think of a guy called Tom Mayley, who's

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Speaker 3: a retired optometrist lives outside of Columbus, Ohio, and we

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Speaker 3: spoke to a year ago for this actual podcast.

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Speaker 5: I'm not sure that even though my sons and spouses

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Speaker 5: are well educated and earning a good living, I'm not

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Speaker 5: really quite sure they can afford to put their children

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Speaker 5: through advanced degrees like I was able to do with

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Speaker 5: my own children. That is a concern that weighs heavily

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Speaker 5: on me, and I have certainly put money aside for them,

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Speaker 5: but with the escalating college costs, I do have great

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Speaker 5: concerns that my grandchildren won't be able to maintain the

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Speaker 5: standard of living that I have and my sons have.

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Speaker 3: And he had a son who just got a promotion

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Speaker 3: and had to move as a result. Tom will tell you, look,

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Speaker 3: I'm proud of my son. He got a promotion, but

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Speaker 3: economically actually ended up going backwards because he's paying more

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Speaker 3: for a smaller house today than he was when he

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Speaker 3: had the lower job. And you know, you have this

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Speaker 3: grind that's there, that's really been amplified in the last

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Speaker 3: couple of years, and people feel like that grind just

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Speaker 3: isn't going away. And that's not something economists necessarily measure.

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Speaker 3: They're looking at aggregate statistics that all look pretty.

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Speaker 2: Rosy after the break, how Democrats and Republicans, boomers and

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Speaker 2: millennials differ on the state of the economy. So let's

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Speaker 2: walk through some of the data you've collected along partisan lines.

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Speaker 2: Half of Republicans and a third of Democrats say they're stressed. Claire,

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Speaker 2: why are Democrats more likely to be satisfied with their

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Speaker 2: personal finance than Republicans or independents? That's a great question.

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Speaker 4: I think some of it comes back to who's in

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Speaker 4: office right now. President Biden has made a lot of

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Speaker 4: his agenda based around the economy by nomics, as we know,

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Speaker 4: the president doesn't have a super direct connection to the economy,

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Speaker 4: but some of the policies he or she puts in

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Speaker 4: place definitely a tribute to it. It does have a

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Speaker 4: lot of implications for this year's election as well. I

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Speaker 4: think in general we found is that Republicans in some

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Speaker 4: of this polling were more likely to sort of be

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Speaker 4: dissatisfied with rising prices. And all people are affected by

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Speaker 4: the rising prices and they're affected the same way. But

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Speaker 4: I think it sort of goes back to the lens

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Speaker 4: in which you view the world.

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Speaker 3: Yeah. Look, I think the reason we are tracking this

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Speaker 3: middle class, which is roughly one hundred million adults in

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Speaker 3: America for two reasons. One, they are the core consumers

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Speaker 3: in a consumption led economy here in the US. They

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Speaker 3: are hugely important in terms of the economy. The second

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Speaker 3: thing is that's one hundred million adults who tend to

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Speaker 3: vote at a higher rate than others in elections. We

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Speaker 3: think how they feel is going to be pretty important

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Speaker 3: in next year's election. There is absolutely a partisan gap.

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Speaker 3: There are also some generational gaps that are interesting, right.

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Speaker 3: So if you break down our poll findings, we ran

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Speaker 3: a question asking people whether they felt the US economy

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Speaker 3: worked for them. Overall, just thirty percent of Americans said

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Speaker 3: they thought the American economy worked for them. That went

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Speaker 3: up to forty four percent for the middle class. And

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Speaker 3: then it gets really interested when you start looking at

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Speaker 3: it by generations. Almost sixty percent of millennials think the

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Speaker 3: US economy is working for them, Millennials in the American

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Speaker 3: middle class, and just thirty percent of Baby boomers in

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Speaker 3: the American middle class think the economy is working for them.

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Speaker 3: And then you translate that through to Democrats and Republicans

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Speaker 3: and independents, and you find sixty percent of Democrats think

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Speaker 3: the economy is working for them, and just thirty two

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Speaker 3: percent of Republicans think the economy is working for them,

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Speaker 3: and it's roughly thirty seven percent of independence. The point

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Speaker 3: is there are a lot of views of the economy

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Speaker 3: that are informed by personal circumstance, and yes, politics gets

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Speaker 3: into it.

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Speaker 4: I think it's really interesting too when we think about

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Speaker 4: perception versus reality, and that's always an issue when we

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Speaker 4: look at the polling, and so basically what we're measuring

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Speaker 4: is the perception, the feelings, and it just gets into

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Speaker 4: some really interesting questions about why people feel the way

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Speaker 4: they do and what contributes to it. But I think,

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Speaker 4: like Sean said, one of the big goals of this

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Speaker 4: project is to look at how this influences how people

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Speaker 4: will vote in the upcoming election, and we know that

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Speaker 4: perception plays such a big role in voting.

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Speaker 2: That's interesting what you said about generations. I'm curious what

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Speaker 2: the polling looks like if you break it down by

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Speaker 2: race and esthenicity. What does it look like there.

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Speaker 3: Yeah, Unfortunately, the race numbers that we have, it's not

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Speaker 3: the most robust in terms of attitudes. But what we

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Speaker 3: find broadly is that almost sixty percent of people of color,

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Speaker 3: for example, in the middle class, say that the economy

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Speaker 3: is working for them, and it's a lower level actually

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Speaker 3: for white middle class Americans, just forty two percent said

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Speaker 3: the economy is working for them.

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Speaker 2: Why is it, Sean, that people of color are expressing

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Speaker 2: more satisfaction in this polling with the estate of the economy.

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Speaker 3: It's a really hard question answer and we need to

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Speaker 3: dig into that more. And one of the things we're

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Speaker 3: going to be doing in this project is really diving

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Speaker 3: into the Latino and Black middle classes in America and

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Speaker 3: how they're doing. What we have seen in the last

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Speaker 3: couple of years coming out of the pandemic is a

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Speaker 3: remarkable reduction in black unemployment levels, for example, and broad

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Speaker 3: unemployment levels for people of color. By some measures, they

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Speaker 3: have recovered better than the white middle class. This has

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Speaker 3: been a feature since the twenty sixteen election of white

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Speaker 3: middle class anxiety about their own personal economies. And you know,

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Speaker 3: if you talk to Republicans, the issues of diversity and

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Speaker 3: inclusion have benefited people of color in recent years. These

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Speaker 3: are incredibly complicated questions, and one of the things you

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Speaker 3: can't do with polling is always get to the bottom

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Speaker 3: of them and so on. But what we're trying very

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Speaker 3: hard to do with this middle Class project is to

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Speaker 3: take this polling and to go out and talk to

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Speaker 3: people and to just listen to people. You know, I

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Speaker 3: spend a lot of time talking to economists and watching economists,

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Speaker 3: and sometimes I wish I could just get those economists

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Speaker 3: who complain about these polls that show a grumpy middle

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Speaker 3: class or grumpy voters out there about the economy. Sometimes

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Speaker 3: I wish I could just get them to sit down

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Speaker 3: with some real people and have that conversation, because if

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Speaker 3: you talk to real people, you just run into very quickly,

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Speaker 3: just this tiredness, right, this feeling that we have been

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Speaker 3: weathering an incredible economic storm over the last few years,

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Speaker 3: and it doesn't matter what the aggregate numbers look like.

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Speaker 3: Yes I'm doing okay, but it still feels damn hard.

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Speaker 2: When the big take is back. What the negative economic

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Speaker 2: mood means for President Biden's reelection bid.

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Speaker 3: They said millions would lose their job and the economy

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Speaker 3: would collapse, but this president refused to let that happen. Instead,

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Speaker 3: he got to work.

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Speaker 2: That clip was from a campaign at the Biden administration

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Speaker 2: debut during the NFL season opener this year. Claire, if

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Speaker 2: the Biden administration feels like he's doing such a good

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Speaker 2: job for the economy, what should be his concern when

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Speaker 2: it comes to middle class voters today.

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Speaker 4: I think for so many people, finances are a major

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Speaker 4: reason why they vote for one candidate or another. When

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Speaker 4: you look at someone's financial situation, that affects every day

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Speaker 4: of their lives and their future and their plans, and

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Speaker 4: it really influences how they vote, and if they think

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Speaker 4: a certain candidate can help improve their finances, that means

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Speaker 4: less worry, that means more opportunity, that means a better

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Speaker 4: quality of life. That's why it's really important to look

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Speaker 4: at not just people's actual financial state, but their perceptions

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Speaker 4: about it as well, because that influences where they vote

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Speaker 4: and how they're thinking about their political stances.

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Speaker 2: And what do you think the Biden administration can do

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Speaker 2: to ease this burden for the middle class before the

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Speaker 2: end of his first term? Is there anything they can do?

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Speaker 3: President Biden, in a pretty unique way among presidents, has

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Speaker 3: staked his legacy on the middle class. He talks constantly

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Speaker 3: about building the economy from the bottom up and the

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Speaker 3: middle out, and he has really turned economic policy in

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Speaker 3: the United States towards a focus on things like industrial policy,

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Speaker 3: which are meant to bring back manufacturing jobs, on a

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Speaker 3: real focus of rebuilding the ranks of unions and kind

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Speaker 3: of enabling unions to get better deals. We saw that

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Speaker 3: in the recent United Auto Workers strike. The problem that

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Speaker 3: Joe Biden has, though, is a lot of what he

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Speaker 3: is doing for the middle class is only going to

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Speaker 3: pay off in the longer term, and in the short term,

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Speaker 3: that middle class is still riding out these kind of

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Speaker 3: stormy waters that we have left behind from the pandemic

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Speaker 3: and our kind of road out of it. And you know,

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Speaker 3: we may still get a recession between now and the

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Speaker 3: November twenty twenty four election, and that would be a

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Speaker 3: huge hit. That doesn't mean that manufacturing jobs aren't going

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Speaker 3: to come back in the longer term, or that the

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Speaker 3: American middle class may be better off five or ten

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Speaker 3: years from now than it is today, and that Joe

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Speaker 3: Biden has some responsibility for that. But there is just

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Speaker 3: that short term grind that he has to get through,

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Speaker 3: and I'm not sure there is very much that Joe

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Speaker 3: Biden can do. In some ways, there's a real risk

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Speaker 3: for him politically if he goes out there and keeps

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Speaker 3: talking about how great the economy is and all of

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Speaker 3: those middle class voters are looking at him and going, well,

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Speaker 3: it just doesn't feel great from where I'm sitting. So

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Speaker 3: it's a really hard road for Joe Biden on the economy.

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Speaker 3: And we have poll after poll showing that in fact,

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Speaker 3: people trust Donald Trump more and that maybe because simply

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Speaker 3: the economy for a time there was more stable. It

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Speaker 3: was most of Donald Trump's tenure came before the pandemic

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Speaker 3: and the recession that that prompted. There. It may also

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Speaker 3: be that they just have had very different personal experiences

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Speaker 3: in recent years, maybe that their kids are older, maybe

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Speaker 3: that their car has died and suddenly they have to

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Speaker 3: go out there and buy a car and pay those

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Speaker 3: higher interest rates. What may save Joe Biden politically is

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Speaker 3: that economy is not the only issue. You know this,

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Speaker 3: Nancy is a political reporter, that abortion, for example, has

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Speaker 3: been a huge issue for a lot of suburban women,

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Speaker 3: for example, a lot of middle class women, and that

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Speaker 3: that may play out more so. It's a really hard

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Speaker 3: road for Joe Biden, but he may be saved by

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Speaker 3: other things.

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Speaker 4: Yeah, and I think too in terms of the economic messaging,

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Speaker 4: it really is a fraud line for him to walk,

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Speaker 4: just because so many people have different lived experiences than

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Speaker 4: maybe the polls suggest. I do think one area where

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Speaker 4: he has made some progress is in a student loan forgiveness.

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Speaker 4: You know, the big headlines this summer we're all about

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Speaker 4: how his freeiveness plan has been struck down. But his administration,

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Speaker 4: through adjustments to some of the forgiveness programs already in place.

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Speaker 4: They've actually erased one hundred and twenty seven billion in

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Speaker 4: student loan debt, which I think is also significant to

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Speaker 4: the middle class because so many people in the middle

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Speaker 4: class have student loans, and that's been one sort of

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Speaker 4: thing that he's done that's maybe gone a little bit unacknowledged,

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Speaker 4: is some of those policies. And you know, we know

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Speaker 4: without student loan debt, so many people have more economic

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Speaker 4: opportunities as well, So that maybe is one area where

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Speaker 4: things are looking up for him a bit.

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Speaker 2: And Sean, how much of this depends on what the

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Speaker 2: Federal Reserve does over the next year in terms of

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Speaker 2: cutting or raising rates a huge amount.

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Speaker 3: And this is a little bit where Joe Biden does

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Speaker 3: have much agency, right because the Federal Reserve is the

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Speaker 3: independent central bank and it's the one that sets interest rates.

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Speaker 3: A lot of economists are starting to think that starting

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Speaker 3: in twenty twenty four, it may start cutting those interest

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Speaker 3: rates that have been stressing out the middle class so

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Speaker 3: much that obviously would be good. Mortgage rates would come down,

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Speaker 3: car loan rates would come down all of a sudden.

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Speaker 3: All of these things might help boost optimism in the

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Speaker 3: middle class. There's a flip side to that as well. Though.

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Speaker 3: One of the reasons the FED could start cutting rates

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Speaker 3: rapidly is that the US looks like it's going into

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Speaker 3: a recession or is going into a recession, which would

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Speaker 3: not be good for the American middle class. Look, this

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Speaker 3: is another example of one of those bits of the

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Speaker 3: economy that Joe Biden just doesn't control and yet could

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Speaker 3: really determine his fate.

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Speaker 4: Yeah, it's such a wild card, I feel like, Sean,

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Speaker 4: I don't know if your sense of it is the

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Speaker 4: same as mine, but I totally see different predictions, even

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Speaker 4: from some of the big bank strateg Just even today,

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Speaker 4: there's a lot of disagreement about when the FED might

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Speaker 4: start cutting rates. That could be as soon as early

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Speaker 4: to mid twenty twenty four or later twenty twenty four,

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Speaker 4: and that you know, would impact a lot of the

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Speaker 4: economy and the attitudes toward it, potentially benefiting Joe Biden,

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Speaker 4: potentially not. So I'm really interested to see how that

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Speaker 4: plays out.

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Speaker 3: You know, one of the big stories in this kind

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Speaker 3: of debate among economists is that over the last couple

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Speaker 3: of years, many economists have just gotten their wrong right. So,

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Speaker 3: you know, the forecasts were that we were going to

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Speaker 3: be in a recession at some point this year. That

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Speaker 3: hasn't happened. The US economy has been much more resilient.

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Speaker 3: A lot of people are forecasting a recession next year

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Speaker 3: that may not happen. A lot of people are forecasting

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Speaker 3: that the Fed will start cutting interest rates. That may

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Speaker 3: not happen. The lesson to the last couple of years

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Speaker 3: is get ready for some surprises.

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Speaker 2: Well, thank you so much, Sean, Thank you so much, Claire.

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Speaker 2: I appreciate it.

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Speaker 3: Always great to be here.

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Speaker 4: Yeah, thank you, it's really fun.

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Speaker 2: Thanks for listening to us here at The Big Take,

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