Stocks are up 12% this year, but nearly half of Americans think they're down. What's going on?

By Charles Passy and Victor Reklaitis

New poll's findings seen as bad sign for President Biden's re-election campaign

A new poll is offering fresh evidence that the U.S. economy's strong performance isn't resonating with many Americans, even as numerous conventional economic indicators are encouraging.

Some 49% of respondents to the poll, conducted by Harris for the Guardian newspaper, said incorrectly that the S&P 500 SPX was down for the year. The U.S. stock benchmark actually scored a record high Tuesday, stretching its year-to-date rise to about 12% following a 24% gain last year.

MarketWatch noted last week that Americans have appeared indifferent to the stock market's rally, even as the Dow Jones Industrial Average's DJIA first-ever close above 40,000 has generated headlines.

Other findings from the new poll include that 72% said they believe the rate of inflation is increasing. The April report for the consumer price index, or CPI, showed prices rising at a 3.4% pace in the past year, down from a rate above 9% in 2022.

In addition, the poll found 56% of respondents said the U.S. is suffering through a recession. In fact, the American economy is in the middle of a nearly 4-year-old expansion, and few economists think a recession is likely.

The poll, which surveyed 2,119 U.S. adults from May 10 to May 12, also found that 58% said the economy is worsening due to mismanagement by President Biden's administration.

The survey respondents' perception about the stock market versus the reality is hard to fathom, say economic and financial experts who spoke with MarketWatch.

"It's not just that they're wrong, it's that they're spectacularly wrong," said Ben Harris, vice president and director of the economic studies program at the Brookings Institution, a Washington-based think tank.

How to explain this disconnect? Harris says it's largely a story about misinformation.

That is, people often gather their information from social media rather than from traditional news media, including financial news outlets, Harris said. And if popular social-media sources skew toward political ones who stand to benefit from painting a bleak picture of the economy, some followers might end up thinking the markets and the economy are in rough shape.

These sources "are there to confuse Americans," said Harris.

The poll's overall findings were seen by some analysts as a bad sign for Biden's prospects in the White House race against presumptive Republican nominee Donald Trump in November.

"The Biden message is not getting across," said Bloomberg News columnist John Authers in a social-media post.

Indeed, Biden has often faced challenges trying to convince Americans that the economy is in better shape than many believe. Meanwhile, Trump has hammered home the message that America's financial state is "a cesspool of ruin."

Still, other experts note that some Americans continue to feel the pinch at the grocery store and elsewhere, even if inflation has come down. And if they're not invested in the stock market, they might let that color their perceptions of how the economy in general - and the market in particular - is actually doing.

"It all boils down to how you feel as an individual," said Stephen Tuckwood, director of investments at Modern Wealth Management.

Even then, Eugenio Aleman, chief economist with Raymond James, said it's important to remember that many Americans invested in the market may not be enjoying such a robust ride - and that could affect their overall view. Specifically, Aleman notes that those invested in portfolios balanced between stocks and bonds, such as the classic 60/40 mix, have not seen the best of returns because of the drag on fixed-income investments in recent years.

Brian Riedl, a senior fellow at the conservative-leaning Manhattan Institute, said he was seeing lots of frustration over the poll's findings, but he said they're not a new phenomenon.

"Historically, voters always poll too pessimistic on economic data by about 25 points," said Riedl on social media. "My grand theory of polling, public opinion, and social media is that nearly everyone thinks they are getting screwed on everything. Economy is always declining, you pay all the taxes and get none of the benefits, everything is a conspiracy, the world is always getting worse, etc."

When asked for a comment the Biden campaign referred MarketWatch to the Biden White House's press office, which didn't immediately respond to a request for comment.

Last week, White House press secretary Karine Jean-Pierre defended Biden's economic policies during a daily briefing for reporters.

"This is a president that has had a pretty successful legislative - especially legislative - tenure in the first three and a half years and has delivered on many things that are popular to the American people," she said.

"We're going to continue to travel the country and talk about investing for America. We're going to continue to talk about how we need to do more to lower costs for Americans."

-Charles Passy -Victor Reklaitis

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05-26-24 1310ET

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