Americans remain pessimistic about the U. S. economy, even as GDP continues to grow and unemployment is at its lowest level in five decades. This disconnect is leading some political experts and economists to read about the deep reasons for the hole and look beyond the country’s still-high economy. inflation.
In many ways, the U. S. customer remains in good shape. Most people who need a job have one, while wages, after all, are outpacing inflation. In 2023, the stock market rebounded from a brutal bear market last year, bolstering the retirement and investment accounts of millions of Americans.
Recent Treasury research found that in 2023, Americans will not only be able to enjoy the same goods and facilities they had in 2019, but they will also have an extra $1,000 to save or spend, as median incomes have risen faster than prices. If you ask Americans about the economy, most give it poor ratings. About 6 in 10 people surveyed via CBS News said they rated the economy as “somewhat bad” or “very bad. “
“There are three credible explanations; the first is obvious, and that is that other people consider the existing economy to be unsatisfactory,” Ben Harris, director of the economics program at the Brookings Institution, said in a webcast Wednesday to discuss the issue. it may simply be due to dissatisfaction with value or dissatisfaction with long-standing structural issues, such as economic inequality and housing affordability. “
Another explanation, he added, could be so-called “referred pain,” the idea that Americans are unhappy about other issues, such as gun violence or social isolation, which then tarnishes their view of the economy. Lastly, Harris said there’s evidence that polarized new sources and negative economic coverage could be to blame.
However, cracks are emerging that imply the development of economic tension among a portion of American households, even though the economy, through maximum measures, remains strong. Here are three charts that explore some of those questions.
Millions of American families had money on hand during the pandemic, thanks to stimulus checks, increased unemployment checks, and the expanded tax credit for children.
But since the pandemic has passed, some consumers are facing more monetary stress. Americans continue to pay more for necessities, such as groceries, which are 25% more than before the pandemic, and more are turning to credit cards to cope.
Given the higher spend on essentials, it’s no surprise that credit card debt is creeping higher, while 49% of Americans are carrying balances from month to month, 10 percentage points higher than in 2021.
As a result, the percentage of Americans who suffer monetarily from credit cards has reached the same point as the Great Recession, according to new research from the Federal Reserve Bank of St. Petersburg. John’s. Louis. La banks consider that a customer is in a monetary situation. Difficulty if they have an account that has been past due for 30 days or more.
It’s true that the current percentage of consumers who suffer similarly to credit cards is low, less than 4% of consumers. But the increase since 2019 indicates that more families are struggling to stay afloat after two years of peak inflation and emerging interest rates.
Even as the economy expands and wages rise, millions more Americans struggle to pay their bills.
The number of consumers who said they found it “very difficult” to pay their household expenses over the past week fell from 26. 9 million in October 2021, when the pandemic was in full swing, to 43. 2 million in October 2023, the recent high. from the U. S. Census Bureau
Even once affordable cities are now priced out of many first-time buyers’ budgets. The combination of rising home prices and higher interest rates, with the latter due to the Federal Reserve’s flurry of rate hikes, means that buyers in half of big cities in the U.S. need incomes of at least $100,000 to buy a home.
Indeed, a report last fall from real estate data provider ATTOM finds that home prices in 99% of 575 U.S. counties are unaffordable for the average income earner, who makes about $71,000 a year.
“Many consumers are still very disappointed that they can’t buy the homes they need, because even though loan rates are no longer 8%, they’re still much higher than what was seen in recent years,” Dana. Peterson, lead economist at the Conference Board, said on the Brookings webcast.
This can leave consumers feeling stuck, especially younger Americans who feel like they’re missing out on milestones in life, such as buying a home.
Quotes were delayed by at least 15 minutes.
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