A look at some of the academic research that helps us understand why people think the economy is doing poorly when it is doing surprisingly well. Why people think the economy is doing worse than it is The tone of news coverage is one possible explanation for the disconnect between actual economic performance and how individuals perceive it, according to a recent Brookings Institution analysis. Since 2018 — including during and after the recession sparked by COVID-19 — economic reporting has taken on an increasingly negative tone, despite economic fundamentals strengthening in recent years, the analysis finds. The Brookings authors use data from the Daily News Sentiment Index, a measure of “positive” and “negative” economic news, produced by the Federal Reserve Bank of San Francisco. The six studies featured below offer further insights. All are based on surveys and polls, some of which the researchers conducted themselves. Several also explore economic perception in other countries. The findings suggest: Economic inequality tends to lead people into thinking the economy is zero-sum, meaning one group’s economic success comes at the expense of others. In both wealthy and poorer countries, belief in conspiracy theories leads people to think the economy is declining — things were once OK, now they are not. In the U.S., political partisanship may be a more accurate predictor of economic perception than actual economic performance. Households at higher risk of experiencing poverty are less likely to offer a positive economic assessment, despite good macroeconomic news.
The economic stuff really isn't that hard. The vast majority of people have had a substantial decrease in their buying power since Biden was elected. That is why they say the economy stinks. It isn't rocket science.
Agree. Peoples opinions on things are heavily waited towards their personal situation, and as alpha said the vast majority have seen a substantial decrease in buying power.
The study in the OP was taken over multiple years, starting even before the Pandemic. Seems pretty generalized about “economic sentiment”, not specific to inflation. But it’s probably somewhat relevant in the sense that we’ve pretty much turned the corner on inflation. 2022 was a bad year in terms of wages not keeping up with inflation. 2023 saw wage growth outpace inflation for every single month. Yet sentiment is lagging behind as if it’s still 2022, and misinformation is strong in the news (especially political news). Alot of people probably have no clue what “real wages” are, what the causes of inflation are, or how inflation in the U.S. compared to our peer nations. Anyone who looked at those comparisons would probably feel grateful with how the U.S. fared. At least they should. But if people are just strictly looking at their own situation, it’s also true that while wages vs inflation technically turned the corner in 2023, at the rate wages are now outpacing inflation, it’s another year of catching up to make up for 2022. Yet, I’d bet even when the actual math crosses that threshold, sentiment will still be bifurcated along political lines based on media consumption. That is the point of the OP.
Read an article the other day that said the majority of negative feelings on the economy are based on grocery costs. Makes sense to me
It is a fact that different individuals tend to hold different opinions. Thankfully, it also seems true that the other person is always the one living in a hole. It is my meager thesis that we should always start the doctrine that our feelings are necessarily a reliable guide to reality, forcing us to seek an alternative path toward this end. A systemic study of nature often provides a superior alternative. These of course aren’t without flaws either, but if we never even consider these outside reports, we’ll be forever stuck within the prisons our of own biases.
Young people feeling that burrito index. There’s definitely a reality there. No doubt it’s rough for first time homebuyers too. I view that housing affordability issue as a more serious problem. Food is actually cheap. Food service is not. Some people apparently think they are entitled to cheap service.
Wages are relatively even with prices but here is the kicker. If you were struggling before covid, you are struggling after covid. Nothing has changed and that is what people are reacting to. The top 1% continue to consolidate all the wealth with some trickling down to the top 10% but if you are in the bottom 90% you dont benefit from a good economy. The economy is great… for the top. That is why the surveys are bad.
While the wealth gap statistically keeps getting worse, I don’t even think it’s just the “super rich” who benefited. People who already own their home have killed it for 2 years. Basically 100% gains, unseen since last housing bubble (hopefully doesn’t end the same way!). People who are renters or young families looking to buy their first home after 2021 took it on the chin (and I know several anecdotes of people forced to move because their landlord raised rents drastically or decided to sell the home they were renting). A lot of people who live paycheck to paycheck, and those who don’t see real estate gains, but instead saw rent increases or got farther away from home ownership are naturally going to be more pessimistic.
This was just published just the other day. It’s world wide not just US and advocates taxing the superwealthy for the benefit of the struggling but it has some interesting stats on how much the top 1% grabbed the last few years. Masters of industry have raised prices and netted $42T in wealth while some around here blame the poor for spending their stimulus checks 3 and a half years ago. Your point is valid that home ownership in the US provides solid wealth growth for Americans with home ownership. Double edge sword though since you do have to live somewhere. Richest 1% bag nearly twice as much wealth as the rest of the world put together over the past two years | Oxfam International The richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99 percent of the world’s population, reveals a new Oxfam report today. During the past decade, the richest 1 percent had captured around half of all new wealth. Billionaires have seen extraordinary increases in their wealth. During the pandemic and cost-of-living crisis years since 2020, $26 trillion (63 percent) of all new wealth was captured by the richest 1 percent, while $16 trillion (37 percent) went to the rest of the world put together. A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 percent. Billionaire fortunes have increased by $2.7 billion a day. This comes on top of a decade of historic gains —the number and wealth of billionaires having doubled over the last ten years. Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations have more than doubled their profits in 2022. They made $306 billion in windfall profits, and paid out $257 billion (84 percent) of that to rich shareholders. The Walton dynasty, which owns half of Walmart, received $8.5 billion over the last year. Indian billionaire Gautam Adani, owner of major energy corporations, has seen this wealth soar by $42 billion (46 percent) in 2022 alone. Excess corporate profits have driven at least half of inflation in Australia, the US and the UK.
Another reason … "It's The Economy, Stupid!" - The Real Reason So Many Young People Are Living With Their Parents | ZeroHedge
