Today press reporting seems to have switched to the other side of reality. Compared to October 1992, economic growth is now slower, unemployment is higher, and tragically the long-term unemployment rate is twice has high. And reported economic growth has been declining rather than improving as it was in 1992. Yet, in recent months much reporting about the economy has turned so upbeat that it has again lost touch with reality. Many look beyond the tragic growth or employment news and say that the economy is improving, or that things could have been worse, emphasizing that it is fortunately nothing like the Great Depression.
When asked what caused the switch, I answer, facetiously, that people must have read our article, remembered it, tried to make a correction, but unintentionally overcorrected. That answer, of course, is out of touch with the reality that both October 1992 and October 2012 constitute the final days of a presidential election where the main issue is the economy, and, as Bob Hall and I wrote, “people’s perceptions about the economy affect elections.”