In Discussing the Economy, Keep It Positive

There are two things I would urge the president to avoid in discussing the economy. The common thread is to keep it positive.

First, do not focus on the fact that the recovery in employment is too slow. It is, and unemployment is still much too high. During President Obama’s first term, the argument for fiscal stimulus rested on the very distressed business environment and weak job market. But today it might be more helpful for the president to stop repeating this old litany of bad news and instead contribute some optimism about how we are doing.

Let me elaborate. There is no assurance that a relatively upbeat presidential assessment would do any good. But it might. We believe leadership matters in other spheres. And economists generally believe in the importance of expectations in shaping current behavior. Since the Great Recession, business has been cautious about expanding and consumers have been restrained in their spending. Though not yet reflected in most forecasts, there are now signs of revival on both fronts. What is more, the recent revisions to the employment data indicate the job market has already been strengthening more than we had thought. So the president has good grounds for offering a brighter vision of economic prospects.

The second thing I would urge on the president is to keep class distinctions out of economic policy. For decades, the wealthy have gotten much richer while middle class incomes have stagnated. This is an important feature of our recent economic history, and it strongly suggests that any search for new revenues should, in fairness, look first to higher income groups. But the president’s agenda, which needs compromise across the political aisles, is not served if the facts of income distribution morph into class warfare in political rhetoric.