When Consumers Tell You They’re Hurting, Believe Them
While some politicians boast of a thriving economy, inflation is eating away Americans’ spending power, and no amount of data spin will make that feel good.
If people tell you they’re in economic distress, believe them. Americans keep saying they are concerned about the economy and think it’s in bad shape; in one recent poll 83% of Americans think the economy is fair or poor, and 72% expect it to get worse. But depending on how you look at it, the data tells a different story — that things have never been better. Unemployment has not been this low in nearly 55 years, nominal wages are going up, and people are still spending.
The latest new survey on economic well-being from the Federal Reserve Bank may reconcile the disconnect. It reveals something that should be pretty obvious: A high-inflation environment is terrible for households. Even though people are spending and getting wage increases, they can still be suffering.
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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