Among the many things most – if not all – of us will be thinking hard about at the top of the New Year is money. How much of it do we have in our pockets and how much would we like to make, as a resolution, in 2015. And one of the foremost thoughts that will naturally come to mind as we think about the desired level of loot in our bank accounts will be the state of the economy.
The consensus at the moment is we have already headed into economic recovery, albeit still a little more sluggish that any of us would like. Most take the recovery news with cautious optimism. But the most important detail in 2015 won’t so much be the actual health of the economy as how we perceive it. These perceptions will significantly shape the political landscape in the New Year as we all anticipate a bloody gridlock royale between Congressional Republicans – now holding both House and Senate – and an embattled Obama White House.
Incidentally, quite a few observers are a bit bullish about U.S. economic prospects in 2015. Says Associated Press:
The United States is back, and ready to drive global growth in 2015.
After long struggling to claw its way out of the Great Recession, the world’s biggest economy is on an extended win streak that is edging it closer to full health. But the new year doesn’t look quite so bright in other major countries.
China is slowing as it transitions from investment to consumption. Japan has slid into a recession. Russia appears headed for one. Europe is barely growing.
And the U.S.?
Six years after its financial system nearly sank and nearly that long since the recession ended, the United States is expected to grow in 2015 at its fastest pace in a decade. Its expansion from July through September—a 5 percent annual rate—was the swiftest for any quarter since 2003.
That pace will likely ease a bit. Still, the economy is expected to expand 3.1 percent next year, according to a survey by the National Association for Business Economics. It would be the first year of 3 percent growth since 2005.
That’s the view from the top, of course. Still nagging large blocks of the American public is this feeling that things aren’t so sunny on the economic front as thought. The big indicators don’t quite match up with the sentiment on the street, which is important since nearly three quarters of the economy is shaped by consumer activity which is driven by confidence.
FiveThirtyEight’s Ben Casselman gives us food for thought by explaining that this year will be the true test of the so-called recovery:
The troubling reality, however, is that a large swath of Americans haven’t yet reaped the benefits of that recovery. Household income was basically flat in 2013, and anemic wage growth means it’s unlikely 2014 was dramatically better. The rising stock market has helped the affluent regain the wealth they lost in the financial crisis, but it hasn’t done much for everyone else. Americans in their mid-20s haven’t experienced a healthy job market in their adult lives — their unemployment rate remains in the double digits.
Politically, it will be interesting to see what that all means. What will it mean for debates over policy in 2015 and what will it mean for candidates as this New Year is the staging ground for 2016. You clearly have two narratives shaping up, one of a muscular economy gaining stride and another of raw economic skepticism that will drive curious waves of populism on both the left and right. Obviously, conventional wisdom says Democrats and President Obama should take credit for carefully pulling us through the Great Recession, but Republicans want skin on that, too. Folks on the left will say “see, told you this is how you do it” and the right will counter back with “it could’ve been much worse if we hadn’t stepped in to hold you back.” But what will be interesting is the dilemma Democrats will find themselves in as they try to tout economic triumphalism while emerging elements in their party, such as Sen. Elizabeth Warren (D-MA), push a not-so-fast script that it’s still rough out there. Republicans, eager to dismantle the Affordable Care Act and Dodd-Frank, will simultaneously tap into persistent anti-Washington and anti-Obama sentiments, putting it on blast perhaps in upcoming gubernatorial races in Kentucky and Louisiana, as well as state legislative races in Virginia. The economy might be recovering, but don’t be fooled into thinking it’s not that big of a deal anymore. It’s always about the economy, stupid.