The American economy is fine, but Americans aren’t

Despite data suggesting things aren’t half bad, the nation remains unhappy about the economy. Why?

Here’s how the US economy looks this week:

A young woman looks back toward a cracked doorway.
  • Good: It’s growing — fast. Last quarter’s 4.9% GDP expansion rate more than doubled the previous quarter’s growth.
  • Good: Median household wealth is way up, with the average family net worth topping $1m for the first time.
  • Good: Hiring was up, layoffs were down, and the unemployment rate has held steady at 3.8%.
  • Good: With inflation falling significantly, the Federal Reserve again decided against raising interest rates (for now).
  • Bad: is still how the populace generally feels things are going, despite all of this.

What gives?

The numbers don’t signal dark economic times, yet — as The Wall Street Journal’s Greg Ip notes — the University of Michigan’s long-running consumer sentiment index stands at “recession-like levels.”

Why? Ip’s theories include:

  • The negative feelings are tied to inflation; even as wages catch up to prices, people still run into sticker shock at grocery stores and gas stations.
  • Good ol’ politics: 57% of Republicans said their personal finances were “excellent” or “good,” but, as is typical when opposing parties occupy the White House, only 5% said the same about the broader economy.
  • Collective pessimism about the economy may just “reflect dissatisfaction with the country as a whole,” lumped in with other sources of tension like crime and foreign wars.

Other factors?

Ip’s theories are sound but don’t tell the whole story — nothing can for a nation of 332m+. A few ideas we’d throw in to explain sour economic feelings:

  • People are living paycheck to paycheck: A whole 62% of American adults are surviving this way.
  • Retirement feels challenging at best: Having a job? Great. Thinking about doing that job every weekday until death? Deflating. A lot of people — 88% of millennials, 91% of Gen Xers, and 86% of boomers — report retirement-saving hurdles.
  • Younger Americans are pissed: Starter homes can be unattainable. College and childcare costs are absurd. That “worse off than our parents” feeling is real and festering.

FWIW: Polling on dogs is often informal and limited to “Who’s a good boy/girl?” — but with dog treat purchases down, US pups probably aren’t wagging their tails for the economy either.

Topics: Economy

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