Rich people think the economy is doing just fine. Here’s why that matters.

October 30, 2013

For people rolling in the green, the economy is looking A-OK. (Marvin Joseph/ The Washington Post)

The economy, most Americans agree, is pretty miserable. In a Washington Post-ABC News poll, for example, 75 percent of Americans rated the state of the economy as "negative" or "poor," versus 24 percent who rated the state of the economy positively. The unemployment rate, at 7.2 percent is still more than two percentage points above where it was when the great recession began almost six years ago.

But there is one group who thinks things are looking pretty peachy: the wealthy.

The American Affluence Research Center surveys families in the top 10 percent of net worth twice a year, selling studies on, for example, their opinions of various luxury brands that might help marketers. Along the way, they ask how these rich families are feeling about the economy.

Pretty good, is the answer. The survey's economic sentiment index is up to 93 this fall, rising 22 points since the spring. It's also the highest since the fall of 2007, before the recession began, when it was at 108. The researchers, who survey 327 affluent households, consider an index above 100 as a "positive" view of the economy and the 93 level as "neutral". Still, surveys of the rest of the masses of Americans reveal views on the state of the economy that are anything but neutral.

It shouldn't be terribly surprising. The stock market is up 24 percent this year. Unemployment among the educated is at very low levels. It stands to reason that the economy looks to be recovering much better if you're someone with large investment holdings and a high-level job than if you're scraping by at a lower-wage job and not benefiting from a run-up in asset prices.

But there may be a second story here. In the last couple of years, any sense of urgency around getting the economy on track has almost disappeared within Congress. In last year's fiscal cliff debate, for example, there was no strong push from either party to extend a payroll tax holiday or find another mechanism to help out low- and middle-income workers. The debate over the latest fiscal bargaining is all about how to reduce the deficit, with little discussion of interim measures to try to boost growth.

Members of Congress tend to be relatively wealthy themselves, and tend to associate with big donors and other prominent folks who would also fit in the researchers' survey definition. And to those people, the economy is pretty much back. This helps explain why Congress has seemed less interested in finding ways to propel stronger growth than the overall surveys and economic data would suggest.

For a more detailed look at the phenomenon, check out Jim Tankersley's piece from May.

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Andrea Peterson | October 30, 2013