As President Donald Trump struggles to address Americans’ growing affordability concerns, he has gotten some sympathy from one of former President Barack Obama’s former top economists.
Jason Furman, Harvard Kennedy School of Government professor and former chair of the Council of Economic Advisers under Obama, told CNBC’s “Squawk Box” on Wednesday pessimistic consumers have overlooked gas prices that have remained affordable, making Trump’s job of addressing the affordability crisis more challenging.
Gas prices in December marked the lowest they’ve been all year, according to data from motor club AAA, with unleaded gasoline $0.18 cheaper nationally this year compared to last. National average prices reached their cheapest on Monday, hitting $2.85 a gallon. That hasn’t stopped consumer confidence falling to its lowest level since April, and approval ratings indicating more Americans disagree with how Trump is handling the economy.
“I’ve been puzzled,” Furman said. “When you’re in government, you’re told, politically, the one price that matters is the price of gasoline. That’s the one price that’s been great this year. And I sort of feel a tiny bit bad for President Trump that he doesn’t get any credit for that.”
Trump has continued to offer his own mixed signals on the affordability crisis, including saying in a primetime address last week he inherited an economic “mess” from the Biden administration, offering to cut checks for millions of military personnel for housing supplements, while simultaneously calling the economy the strongest it’s been.
According to Furman, Trump also has a bit of a tough crowd: Consumers have been concerned about inflation and the price of groceries, which have increased nearly 30% over the past five years, making it more difficult to assuage economic anxieties, even when there are other optimistic signals.
“Consumers are just in this sort of, whatever the highest price is, is the price they’re going to focus on and be upset about,” he said. “And that’s a really hard problem to solve economically or politically.”
Mixed economic signals muddy K-shaped economy
Conflicting economic indicators extend beyond prices, Furman said. The U.S. saw its strongest economic growth in two years last quarter with a 4.3% GDP growth, exceeding past analysts’ estimates. Meanwhile, the unemployment rate creeped up to 4.6% in November, according to the Bureau of Labor Statistics, markedly higher than last November’s 4.2% and above 4%, which is considered reasonable.
“If all you had were the jobs numbers, we’d all be doing our recession probabilities right now—Is it 30%? Is it 50%? Is it 70%?” Furman questioned. “But then we have this GDP growth number, and that just gives us our boom probability.”
Unlike many economists who see a lopsided, K-shaped economy of the rich getting richer while the poor get poorer, Furman isn’t so sure. He noted that on top of some consistently low prices, such as gas, wage growth is still strong, a metric associated with increased spending and productivity. To be sure, data from the Federal Reserve Bank of Atlanta Fed indicates wage growth for the quartile of lowest-wage Americans went from a high of 7.5% in 2022 to about 3.5% today, its lowest in 10 years.
“I’m less convinced about this K-shaped recovery than other people are,” Furman said. “Everyone wants prices to be 25% lower. Nobody wants their wages to be 25% lower.”
Other economists, such as KPMG chief economist Diane Swonk, see the connection between economic growth, rising unemployment, and the K-shaped economy. Swonk told Fortune the strong GDP growth was indeed reflective of a K-shaped economy where—in addition to resilient consumer spending and skyrocketing corporate profits—businesses have learned to grow without hiring, padding margins without expanding their team, a trend that could be exacerbated by AI displacing jobs.
“We are seeing most of the productivity gains we’re seeing right now as really just the residual of companies being hesitant to hire and doing more with less,” she said.
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