Americans’ optimism

about the economy is indeed at a near-record low, despite strong economic indicators.

Here’s what’s behind this disconnect ¹:

– Inflation Concerns: Rising prices, especially for essentials like food and gas, are weighing heavily on Americans’ minds. Food prices have increased by 20% since President Biden took office, and gas prices remain about 30% higher than pre-pandemic levels.

– Interest Rates: Higher interest rates are affecting consumer sentiment, particularly for those looking to buy homes or cars. Mortgage and credit card rates have increased, squeezing borrowers and homebuyers.

– Partisan Biases: Americans’ views on the economy are increasingly influenced by their political affiliations. Surveys show that sentiment can shift significantly depending on which party controls the White House.

– Media Coverage: Negative news coverage is contributing to the pessimism. Research suggests that economic news coverage has become increasingly negative and disconnected from economic fundamentals.

– Demographic Differences: Certain groups, such as low-income Americans, women, and rural residents, are feeling the economic strain more acutely. These groups tend to spend a larger portion of their income on essentials affected by inflation.

Some key statistics illustrating the disconnect between economic indicators and public sentiment include ¹ ²:

– Unemployment: Near record lows, yet 65% of respondents in a Marquette Law School poll said the economy was “not so good” or “poor”.

– Job Creation: Robust job creation is not translating to optimism, with many Americans feeling that the economy is not benefiting them personally.

– Consumer Sentiment: Surveys show that consumer sentiment remains lower than expected, given the strong economic numbers.