The biggest midterm takeaway: the economy is stronger than we thought

The day after the midterm elections, I was at a small business client, and of course everyone was talking about the results and how the Democrats had done better than expected.

One woman, Linda, said something that really caught my attention. She said she voted for Lt. Gov. John Fetterman (D-Pa.) because of his stance on abortion. Another person, David, said the same thing and he was also concerned about some of the more radical Republicans. I heard similar stories from other employees who discussed how they voted, ranging from distrust of former President Trump to concerns about voting rights. But you know what doesn’t get mentioned? Economy.

Linda makes about $50K per year. David does about the same. Are these the people most affected by the “slowing economy,” “high inflation” and “down markets”? You would think so. You would think that they would be so upset by what happened to their pocketbooks that they would vote for change.

But no, these people are not choosing to use their wallets today. Their concerns were other, non-economic issues. Why? Because if there is one takeaway that resonated the most from the midterms, it is this: Maybe the economy is not so bad.

Take my client, a 150-person manufacturer located in New Jersey. 2022 is an auspicious year for them. They are adding employees and looking for more. They buy equipment and inventory. They raise prices and also get price increases. They’re doing so well this year we’ve had to increase their expected tax payments so they don’t get hit with a huge bill in January. Sure, they’re concerned about the prospects for 2023, but that’s not uncommon coming off a good year and looking into an uncertain future.

And what about their employees? We read that inflation is in 8.2 percent and grocery and gas prices “go up”. But, according to latest data from payroll company ADP, its employees and customers saw an average salary increase of 7.7 percent over the past year. And those who took part in the “Great resignation” by changing jobs were rewarded with an average of 15 percent increase in their salary.

Taking this number into consideration, it seems that most employers are stepping up to keep their employees on par with inflation. You can’t blame them. With unemployment so low job vacancies so high (another reason workers don’t seem to be worried about the economy), businesses must do what they can to retain their best talent.

I live in downtown Philadelphia. The restaurants here are busy. Retail stores on Walnut Street have acknowledged the vacancies that plagued our shopping centers after the chaos of 2020. More people are returning to their office buildings (or working from home on hybrid schedules). Diners spilling out of expensive steak houses on Broad Street. The airport, like the two dozen other airports I’ve been to over the past six months, is packed with tourists, which is surprising given the Transportation Security Administration. to report that the number of airline travelers is at or above pre-pandemic levels. More than a few hotels I have stayed in have been sold out.

And yes, gas prices are higher. But this wasn’t the 1970s, when my dad’s car got 27 gallons to the mile. It may cost more to fill up, but the tank is worth more thanks to the fuel efficiency of today’s cars.

So, where is the recession? GDP it was up 2.6 percent this quarter. Household wealthAlthough taking a hit thanks to market declines, it remains at a historically high level, as it is not consumer spending. Retail real estate is enjoying its “biggest revival in years,” according to a latest report. Manufacturing is downbut the service industry now employs more people from before the pandemic and stay strong. The stock market has been down, but when has the stock market ever been a reliable economic indicator? small business trust fell slightly in October for the first time in four months. The real estate industry is suffering thanks to high mortgage rates and a steep rise in housing inventory. But let’s admit that 2020 and 2021 are banner years and let’s also hope that those realtors save a few dollars by then.

Rather than relying on surveys that suspiciously measure “optimism” and “confidence,” I’ve found that there’s no better place to measure the economy then by looking at data from real-life banks. And the data, as of September 30, is good.

Wells Fargo CEO Charles Scharf reveal that “both consumer and business customers remain in a strong financial position.” JP Morgan Chase CEO Jamie Dimon, who isn’t exactly an economic optimist, admit it Consumers are “healthy” as “many job openings and household savings are still plentiful for now keeping credit card spending and bad loans at bay.”

Things are not all rosy. Interest rates are rising, inflation remains stubbornly high, the tech industry is collapsing, capital is harder to come by and corporations seem to be warming up for big layoffs. Thanks to the global economic slowdown, unstable energy prices, the war in Ukraine and supply chain problems related to the pandemic, many economists are predicting a recession in 2023.

But let’s admit that right now the economy doesn’t seem so bad. If it gets bad, we’ll see more voters like Linda and Dave more concerned about their bank accounts than abortion or voting rights. That didn’t happen in the middle of this semester.

Gene Marks is the founder of The Marks Group, a small business consulting firm. He appears frequently on CNBC, Fox Business and MSNBC.

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