Sentiment about the U.S. economy is currently in an upswing: 28% of Americans would say the economy is either excellent or good, according to recent data from Pew Research Center. In April 2022, only 19% expressed the same positivity.
Still, this is far below what perceptions of the economy were pre-pandemic. In January 2020, 57% of Americans said the economy was good or excellent.
Despite indicators that things are looking up, Americans remain pessimistic about the financial state of the country.
More young adults are employed full-time today than in 1993, according to Pew data. Weekly jobless claims from January 8 to January 13 were the lowest they had been since September 22. And inflation is slowing.
These factors might not be as encouraging as they appear because of larger, systematic issues, says Kyle K. Moore, an economist at the Economic Policy Institute.
“Recent improvements are taking place against a backdrop of many decades of too slow wage growth, increasing inequality, and a lot of misdirected public investment that has led healthcare and education to be a source of economic stress,” Moore says.
America was pulled out of a recession because of some “smart spending” such as stimulus checks, but that hasn’t fixed the persisting issues.
“The economy isn’t sick right now,” Moore says. “We don’t have the flu. But that doesn’t mean we don’t have chronic conditions that need to be treated.”
‘A substantial amount of Americans are feeling the effects of the inflationary period’
High prices remain the stickiest issue. Of Americans who reported feeling like the economy is fair or poor, more than a quarter said it’s because of high inflation. Another 21% blamed high cost of living and 15% said it was because of low wages.
Prices in supermarkets might be falling, but they are not reflecting a sharp enough change for most shoppers, says Joceyln Kiley, associate director of research at Pew. Frozen vegetable prices are up 6.1% year-over-year and sugar is up 6.9%, according to data from the U.S. Bureau of Labor Statistics.
“A substantial amount of Americans are feeling the effects of the inflationary period, even if some indicators are moving away from that,” she says.
Recent layoffs at major companies are also likely coloring Americans’ view of the economy. Microsoft will let go of 1,900 employees from its gaming unit and Citigroup will lay off 20,000 employees within the next two years. Google cut several hundred jobs from its hardware and central engineering teams and EBay announced it would be eliminating 9% of its workforce this year.
Plus, larger costs still loom. Tuition at an in-state public university, for example, is twice what it was 20 years ago, according to College Board. Total healthcare premiums paid in 2023 rose 18% from 2018, according to data from Kaiser Family Foundation. And 2023 was the least affordable year for home buying, according to a Redfin report.
While wage growth has outpaced inflation in the last few years, it’s still not aligned with productivity. From 1979 to 2020, productivity grew almost 62% but wages only rose about 23%, according to data from the EPI.
“Wage growth hasn’t been in line with productivity for 40 years and that comes from a very decimated labor movement since the 1980s,” Moore says.
Wage growth hasn’t been in line with productivity for 40 years.
Kyle K. Moore
economist at the Economic Policy Institute
Black and brown Americans are facing more acute financial challenges, he adds. From 1979 to 2020, White workers experienced 30.1% wage growth, while Black and Hispanic workers only earned 18.9% and 16.7% more, respectively, according to data from the EPI.
“There is some reason families are experiencing this economic anxiety,” he says. “Stagnant wage growth for a long time, underinvestment in goods and services, and discrimination within the economy. That is the background.”
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