In 2016, Donald Trump’s promises to make America great again won him the election. This cycle, he’s been appealing to a more recent source of nostalgia, repeatedly boasting that he ushered in “the greatest economy in the history of the world” during his only term in office.

While those claims have been thoroughly debunked by economists and journalists, including our own, Trump’s campaign is tapping into — and perhaps, feeding — some real apprehensions about the state of the U.S. economy. In a new poll released Monday by the Associated Press, 62 percent of registered voters said that the economy is in poor condition, although they’re split over which candidate will do a better job improving it.

But the hyperbole of the Trump campaign is helping to obscure what’s been a remarkably strong year for macroeconomic indicators. Inflation is now way down, wages are considerably up, and the nation’s gross domestic product is chugging along at rates we haven’t consistently seen nearly a decade.

“The economy is like this big elephant. Depending on which part of the elephant you touch, you get a different perspective. But if you take a big step back, and take a look at the elephant as a whole, the data is about as good as it gets.” — Mark Zandi

In fact, the numbers look so good of late, there’s an argument to be made that Trump’s rhetoric of “greatest ever” might apply to the current economy he’s now belittling. On a recent episode of the Inside Economics podcast, Moody’s chief economist Mark Zandi and colleagues dissected the truth behind the recent numbers: “In the 35 to 40 years that I’ve been watching this economy,” Zandi said, “I’m hard-pressed to find a time when things are better than they are today, by objectively looking at the economic data.”

Though the economy is “rip-roaring” at the moment, according to Zandi, the public perception has lagged far behind. And that consternation could be a decisive factor in the outcome of the presidential race. According to an October poll by NPR / PBS News / Marist, 95 percent of voters say that the economy will factor into their decision for who to vote for, unequivocally making it the top issue of this campaign.

We caught up with Zandi to break down why he sees the economy being in such great hands at the moment, how that could change based on the election results, and why voters view the economy through an emotional lens more than an analytical one.

This is a lightly edited version of the conversation

Malcolm Burnley: You posed the following question on your podcast: Is this the Best Economy Ever? Can you talk about what prompted that conversation and what you ultimately came up with?

Mark Zandi: The economy is like this big elephant. Depending on which part of the elephant you touch, you get a different perspective. But if you take a big step back, and take a look at the elephant as a whole, the data is about as good as it gets. If you look at GDP — gross domestic product, which is the value of all the things that we produce — it’s growing, after inflation, at 3 percent. We’re creating a lot of jobs across a lot of industries.

Unemployment is low, about 4 percent across every demographic (ethnicity, age, gender, region of the country). Inflation, which had been a problem two, three years ago, is now back in the bottle. The stock market is hitting record highs on an almost daily basis. If you’re among the two-thirds of Americans that own their own home, you’re sitting pretty because housing values, even in Philadelphia, have been rising. In its totality, it’s hard to beat it. And there have been very few times in history when it’s been better than it is today.

You’ve argued that it’s even better than the late 1990s. So why aren’t people feeling that success?

When you touch different parts of the elephant, some parts, some groups, are doing better than others. High-income and wealthier households are doing fabulously well. Lower-income households, not so much. They got hit by inflation and took on a lot of credit card debt to supplement their income, to maintain their purchasing power — which is more manageable when [interest] rates are low. But now that rates are high — the average credit card interest rate is 22 percent — that’s very difficult to manage. So there are clearly parts of the economy that are struggling.

The anxiety over the economy feels more widespread, not limited to any one voting bloc or demographic.

I mean, there is definitely a disconnect between all this happy talk that you’re hearing from me and what many Americans say they feel about the economy, which is not nearly as upbeat as what I’ve described. I think that the high inflation we suffered back two, three years ago, people still feel that financial sting, particularly for basic things that they need, like groceries and rent and gasoline.

And even though the prices for those things haven’t really risen all that much, if at all, over the past year, people are still going back to three years ago, and they’re saying, Hey, I’m paying 20 to 25 percent more for groceries; I’m paying 20-25 percent more for my rent, and that really makes people upset. Now, their wages are rising more quickly than inflation. So, I think over time, that financial sting will fade, but there’s no game-changing event here. That’s a process that’s going to take time.

“On the things that we could focus on as a policy to try to support growth, tariffs are not even on the list, and in fact, they’re on the trash heap of history, deep underneath the pile of manure.” — Mark Zandi

It’s almost like everybody has a particular food item that they buy on a regular basis that they’re using as the litmus test for everything. I taught a course at Wharton, and one student was complaining about the cost of ramen noodles. He lives off ramen noodles. My niece, who lives in Philly and is a social worker, was complaining about kombucha. Baby formula, a pound of sugar, everyone’s got something. Most Americans have never experienced inflation, so they’re like, What the heck is this? Is somebody ripping me off?

So can you talk about what policies, if any, have been driving this economic resurgence over the last few years?

Policy has clearly played a role in getting us out of the pandemic and back to where we were pre-pandemic, much faster than any other economy on the planet — by orders of magnitude. That goes to monetary policy. The Fed was very aggressive in lowering rates when we were in the teeth of the pandemic. You could argue that they were too slow to raise interest rates when the economy was really strong and starting to suffer with higher inflation, but broadly speaking, they did a good job.

And then, of course, fiscal policy: the Cares Act in March of 2020 and then the American Rescue Plan in early 2021. If you add those up, that’s $5 trillion worth of support, including three rounds of stimulus checks and help to small businesses. And that really got us back going.

So are people letting their emotions influence their views on the larger economy, or if not, what gives?

I think everyone’s looking at the economy through their own political prism. And given our political fracturing, everyone’s got a different prism that they’re looking through. In fact, there’s a survey done by the University of Michigan, a Consumer Sentiment Survey, which they’ve been doing since the 50s. They ask a bunch of questions about people’s finances, and then they also get some demographic information about the respondents, like, are you Republican, Democrat or Independent? So you can see that the day that Biden beat Trump, Republican sentiment went from the economy being really good to it’s bad as it’s ever been. And I assure you, if Trump wins this election, Republicans are gonna go right back up and Democrats are gonna go right back down.

I’d love to ask about a hot election topic, which is tariffs. Last week, Treasury Secretary Janet Yellen criticized Donald Trump’s tariff proposals, saying they’d spark more inflation. What will be the impact of those tariffs, if implemented?

It’s pretty straightforward. I mean, it was settled 100 years ago and here we are debating it again, which is bizarre. Universal tariffs on lots of products from lots of countries makes no sense to me whatsoever. It is a tax in the form of paying a higher price for those imported products, and they’re going to be paid by all Americans.

Now, if you’re talking about strategic tariffs, because you’re in the middle of some kind of trade battle where someone’s not playing fair — and there’s no other way of adjudicating disagreements around trade — then, scalpel-like tariffs I’m on board with. But these broad-based tariffs, they’re not going to create jobs. On the things that we could focus on as a policy to try to support growth, that is not even on the list, and in fact, it’s on the trash heap of history, deep underneath the pile of manure. I think it’s really bad policy.

I understand you’ve developed a forecasting model for presidential elections, which looks at economic variables such as the price of gas and the cost of a mortgage, and predicts the outcome based on those numbers. Could you tell us more about that?

I produce forecasts that are used by a wide array of financial institutions, government corporations, for planning and budgeting and risk planning, capital management. So if I’m producing a forecast, I need to say something about fiscal policy and economic policy. You know: What’s trade policy going to be? What’s the tax policy going to be? What’s government spending policy going to be? And if I’m going to do that, I have to have some view, particularly in the current context, of the makeup of government, who’s going to be president, what Congress is going to look like.

Right now, the model is saying Harris should win very close. And PA is the key swing state, it’s far and away, the most important state. In fact, I joke that it’s really the western suburbs of Philly that matter, my county, probably my street at the end of the day. That’s how close it’s going to be.

What will be the effects on the economy, if each candidate wins?

Bottom line, it seems that one of these two scenarios is going to happen: Harris wins, with a divided government or Trump wins, with a Republican sweep [of Congress]. If it’s Harris, divided government, that’s the status quo. Nothing really changes. You know, the economy you got today is the economy you’re going to have a year from now. We’ve got other concerns and issues, like a debt-limit battle, but it’ll be roughly the status quo.

If it’s Trump and a Republican sweep, that’s a game-changing event. We’re going on a whole different path. How far is Trump actually going to go with these proposals on tariffs and deportation and capturing the Fed and tax cuts? It depends, but I think that’s an economy with higher inflation, higher interest rates, and so much diminished growth. It’s a weaker economy.

One last question. Outside of the election if there’s one thing you’re worried about — domestically or globally — about the economy, what would that be?

The U.S.-China relationship. We’re the biggest economies on the planet, and we’re moving in opposite directions, and that’s just not a healthy direction to be headed in. There’s a greater chance that we get into some kind of military conflict, because our interests aren’t aligned. And you know, when your economies are integrated, you don’t want to hit the other guy over the head, because it’s going to hurt you. If you’re decoupled, it’s much more likely you’ll do that. So I think that’s the biggest threat going forward from an economic perspective.

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