Breaking down America’s economic disconnect
Image: UPenn Wharton
Is the US economy booming or busting? It all depends on who you ask.
According to much of the official data used by economists, the US is in a pretty good spot – but many Americans have a more pessimistic view of the current situation, per a new Guardian-Harris survey.
A few examples:
- 55% of Americans believe the economy is shrinking, and 56% think we’re currently in a recession – however, domestic GDP, the broadest measure of the economy, has grown for seven consecutive quarters.
- 49% think the S&P 500 is negative for the year. It’s actually increased 11+%.
- 49% believe US unemployment is at a five-decade high, though the rate has been near a five-decade low since January 2022 (sub-4%).
“Key” economic data vs. reality
The survey is the latest evidence of a disparity between fairly promising data regarding the jobs and stock markets, and what many Americans experience in their day-to-day lives.
- When it comes to the jobs market, wages have struggled to keep pace with recent price increases. Since January 2021, the Consumer Price Index has risen by 19.9% compared to a 16.8% bump in average hourly wages, while the overall net worth of US households has grown an inflation-adjusted 0.7%.
- And, in the stock market, around three-fifths of Americans own shares either directly or through index funds. But participation is skewed towards the richest 10%, who own ~93% of all public equity wealth.
Looking ahead… There are a growing number of signs that everyday Americans are feeling financially squeezed. US consumer sentiment fell last month to its lowest level since November, credit card delinquencies are up sharply from this time last year, and the Fed this week expressed concern that inflation remains stubbornly high.
📊 Flash poll: Which of the following economic indicators do you consider as the most important when evaluating the US economy? (Choose all that apply)
See a 360° view of what media pundits are saying →
Sprinkles from the Left
- Some commentators argue that by many current economic standards, Americans are doing pretty well – and their misconceptions about the economy stem from thinking outside their own personal finances, which are largely in good shape.
- Others contend that the clear disconnect between the state of the US economy and Americans’ perceptions is a sign of growing backlash centered on cultural anxiety in a fast-changing world.
- “Why Are Americans Still Down on the Economy?” –Paul Krugman, NY Times
- “Why a booming economy isn’t helping Biden” –Fareed Zakaria, CNN
- “Does Interest Rate Pain Explain the Consumer Sentiment Gap?” –Clive Crook, Bloomberg
Sprinkles from the Right
- Some commentators argue that despite Biden’s claims that recent jobs reports and other data point to a healthy economy, his policies are clearly leaving Americans worse off than before he took office, as prices rise and borrowing costs make American dream essentials like a house and car less affordable than ever.
- Others contend there are a myriad of reasons that perceptions are so misaligned – but an obvious one is the economic status of Americans is very bifurcated into haves and have-nots.
- “Bidenomics isn’t working” –Washington Examiner Editorial Board
- “The disconnect in perceptions of the economy” –Tatiana Bailey, Denver Gazette
- “Do the GDP and Dow Reflect American Well-Being?“ –Jacob S. Hacker and Jonathan D. Cohen, WSJ
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