Just about every voter said the economy was a key factor for them, with roughly three-quarters indicating it was either “very” or “extremely” important as higher prices exact a toll on their bank accounts.
Yet the heightened concern comes at a moment of unprecedented economic confusion. More than two years after the start of a global pandemic, the economic indicators point in contradictory directions, showing signs of strength and growth, as well as evidence of distress and instability.
The worrisome news is plain enough everywhere, visible to drivers passing service stations, consumers in grocery store aisles and tenants searching for a place to lease.
In a word: inflation.
The government’s consumer price index has risen at its fastest pace in four decades. Price hikes were even higher in metro Atlanta, including rents, groceries, gasoline. Job growth is strong, unemployment is low, wages are up — all signs of a strong economy — but most of the media noise and consumer nervousness is pegged to those higher prices.
The AJC poll of 902 likely voters was conducted July 14-22 and has a margin of error of 3.3 percentage points. It was conducted by the University of Georgia’s School of Policy and International Affairs.
The poll showed voters with dual concerns, finances on one hand and social issues on the other. That split is reflected on the campaign trail, with both Republicans and Democrats spinning the issues and some voters hungry to take out their angst in the voting booth.
Mark Manley, who works in real estate auctions in the South Georgia town of Pavo, called President Joe Biden’s record “absolutely horrible.”
While acknowledging limits to White House influence on the $24 trillion-a-year U.S. economy, he said, “there has got to be some blame placed on the president.”
Yet historically, it is the independent Federal Reserve that carries the fight to inflation, and in recent months the Fed has been aggressively raising short-term interest rates. The idea is to make a range of transactions more expensive, taming the demand blamed for pushing prices higher.
Higher rates chill the desire of companies to expand and hire and of consumers to spend, said Cathy McCrary, a professor of accounting at Georgia Gwinnett College.
“You look for places where the belt can be tightened,” she said. “Maybe you don’t take the vacation you were going to take. Maybe you buy more store brands.”
A ‘soft landing?’
Almost exactly half of those surveyed for the AJC said rising costs of gas and groceries are “extremely important” to their voting decisions, a notch more than those putting gun violence in that category. Roughly 40% of voters said abortion was “extremely important,” followed by 37% who said the same thing about taxes and 36% who said immigration.
A slight majority — 52% — said inflation has had a “significant, negative” impact on their daily lives, while 35% said it was a noticeable factor.
It is not only demand that’s a problem, said Chris Arnone, a partner at the Atlanta-based accounting consultancy Moore Colson.
Inflation is a problem worldwide, partly because the COVID-19 pandemic shook up the global economy and the vibrations haven’t yet stopped, and rate hikes can’t address all of that, he said.
“Issues with the supply chain, the price increases, price adjustments and the need to revise strategy — that is still very much true,” Arnone said. “But if there is a downturn in consumer demand, we are not seeing that yet.”
Credit: Stephen B. Morton for The Atlanta Journal Constitution
Credit: Stephen B. Morton for The Atlanta Journal Constitution
Rate hikes historically have preceded most recessions. So there’s also fear of collateral damage in the Fed’s battle, a downturn that throws millions of people out of work.
Fed officials say they want a “soft landing,” dampened inflation and slower growth, and there are some hints that inflation has peaked, said Angelo Kourkafas, an investment strategist for Edward Jones.
Gas prices, while higher than a year ago, have dropped dramatically. Wholesale commodity prices have also declined, he said.
Unfortunately, the risks of recession have risen, Kourkfas said. “The Fed does not have a good track record for engineering a soft landing,” he said.
An Edward Jones survey of Atlanta residents found that nearly half have adjusted their timelines for major life events, such as delaying the purchase of a home, getting married, going to grad school or retiring. And the most common reason given for the change was rising costs.
When the Fed’s rate-setting committee hiked rates Wednesday, Fed Chairman Jerome Powell said the current pace of job growth makes him doubt that the economy is now in recession. In Georgia, the unemployment rate fell in June to an all-time low of 2.9% — not typically the sign of a downturn.
Metro Atlanta last month added 20,600 jobs, the second-strongest June on record, bested only by the month before the 1996 Olympics.
Yet there are signs that the economy is at an inflection point.
The gross domestic product declined by 0.9% during the past quarter, according to a preliminary government report released Thursday. It followed a 1.6% annual drop in the GDP from January through March. Consecutive quarters of falling GDP are often an informal, though not definitive, indicator of a recession.
And while there are still shortages of workers for many positions, the balance between openings and jobseekers has changed, said Monica Plaza, chief strategy officer for Wonolo, an online job site for many “gig” positions, such as those in warehouses.
She’s seen signs of deceleration as businesses respond to both the higher rates and the hype about recession. There’s been no wave of layoffs, but many employers are growing more cautious about hiring.
“It’s the number of listed jobs that have declined, not the number of workers that have increased,” Plaza said.
The need for workers has continued to drive up pay. Companies may be worried about the future, but they have customer demand now, said Kim Wallace, Duluth-based president of the staffing company EmployBridge.
Frontline, blue-collar jobs that two years ago paid $12 to $14 an hour are now paying $14 to $18, she said.
But Wallace also sees a reluctance to add permanently to payroll. “We are not seeing as many companies bringing someone on as a direct hire,” she said. “Some are saying, ‘Maybe I’ll just bring in somebody on contract.’ ”
‘We’ve lost so much’
Certainly the politicians are reading the wind.
U.S. Sen. Raphael Warnock leaned into the issue early, proposing plans to suspend the federal gas tax, curb prescription drug prices and investigate global shipping firms accused of price gouging. And Stacey Abrams, the Democratic nominee for governor, has tried to one-up Gov. Brian Kemp on several of his economic stances.
Kemp has walked a fine line, decrying Biden’s policies for flipping the U.S. economy into recession, while also bragging on a simultaneous economic surge in Georgia. He recently announced a $1.1 billion refund using state surplus money, and he suspended the state sales tax on gasoline into mid-August, spurring Abrams to say she would extend the tax break for the entire year.
She often tells crowds that Kemp can’t have it both ways by pillorying Biden for national economic instability even as he boasts of Georgia’s record surplus and low jobless rate.
“You can’t take credit for the stuff you like, and then put blame on people for the stuff you don’t like — which is Brian Kemp’s M.O.,” Abrams said at a campaign stop Friday in Dalton.
Credit: Chris Day
Credit: Chris Day
Republican Senate hopeful Herschel Walker takes every chance he gets to link Warnock to Biden’s record. And Kemp often talks about “Abrams-Biden inflation” while invoking his decision to quickly reopen the economy during the pandemic as an example of decisive leadership.
The hurting was far worse during the recession of 2007-09, when unemployment rates were in double digits, evictions and foreclosures were an epidemic, and food pantries were swamped with the needy.
But many voters are focused on today’s problems.
Joanna Finkelstein of Newnan, a part-time accountant, said she’s afraid of watching her nest egg shrink along with the stock market’s retreat.
“We’ve lost so much money in retirement,” she said. “How the heck are we going to make it up? We just don’t know.”
And while overall spending has been strong, there are leading indicators — before households really hunker down, they cut discretionary spending, buy cheaper cuts of meat or generic liquors, donate less to charity and give up what they don’t think they need.
Animal shelters have been bulging as people surrender pets they thought they wanted, said Susan Jacobs-Meadows, executive director of Canine CellMates, a diversion and rehabilitation program using dogs at the Fulton County Jail.
Donations for her own organization started dipping a few months ago, she said.
“It’s harder for people to freely give money when they are concerned about their own financial well-being.”
Staff writers Shannon McCaffrey and Mark Niesse contributed to this article.
What is a recession, anyhow?
Despite the common cited shorthand, a recession isn’t two consecutive quarters of decline in the gross domestic product. The 2001 downturn, for example, had only one quarter of shrinkage.
Instead, defining a recession is something of a judgment call involving a number of variables.
The arbiter of recessions, the National Bureau of Economic Research, defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
That has usually meant rising unemployment, deeper household debt, delinquencies on loans and a tide of evictions. And it has usually meant a decline in GDP — just not always.
How to tell? Recession or no?
While no guarantee, there is a compelling signal — known as the Sahm Rule after economist Claudia Sahm. That happens when the three-month moving average of the unemployment rate rises from its low by 0.5 percentage points or more.
At this point, the Sahm Rule says no. In recent weeks, initial claims for unemployment have ticked up, but the unemployment rate remains near historic lows.