Massive Economic Disconnect: Americans Say They Hate The Economy But They Act Like They Love It

Something not added. And that has a lot to do with the nation’s first inflationary crisis in decades.

Gas price is at a seven-year high. Food prices is skyrocketing. New car prices rose the most in October since 1975.

Simply put, the cost of living is going up and Americans are not happy about it. Inflation is overshadowing the real bright spots in the US economy.

“The economic news is generally good,” said Gus Faucher, chief economist at PNC.

The good news is that despite high inflation and supply chain crisis, Americans are still shopping. That’s important because consumer spending makes up two-thirds of the economy.
October retail sales report, easily beat expectations, signals the US economy is entering the holiday shopping season with serious momentum – despite the doom and gloom signaled by the polls.

“People say they don’t feel great about the economy – but they’re spending,” said Aneta Markowska, chief economist at Jefferies. “I just don’t quite believe what the trust reports are telling us.”

Ultimately, if Americans continue to spend, this trust issue will become more of a political issue for President Joe Biden – as opposed to an economic one.

Show confidence: Workers are quitting more than ever

Of course, it’s important to note that different people are experiencing different things in today’s economy – especially before all the shock waves caused by Covid. Some parts of the economy hit hardest by the pandemic, including the tourism industry, are still struggling to recover.

And inflation hurts most low-income families and those living on fixed incomes. Upcoming Social Security cost-of-living adjustments, but not until next year.
However, there is ample evidence that the overall job market continues to recover rapidly from Covid. ONE Recruitment spiked in October reduced the unemployment rate to 4.6%, from nearly 15% in April 2020.
Goldman Sachs expects the unemployment rate to fall to 3.5% by the end of next year, matches a 50-year low pre-pandemic.

Despite concerns about a slowdown in summer hiring, the revisions show the government has significantly underestimated job growth between June and September.

The Labor Department ticked off its initial forecast with a total of 626,000 jobs for that time period.

At the same time, the record 4.4 million Americans quit their jobs in September, clear evidence of how much leverage workers have in today’s economy.

Biggest price spike since 1990

This is not to say that inflation is not a real challenge. That is.

Consumer prices increased sharply in October due to fastest rate since 1990. Inflation has been stronger and more prolonged than predicted by the White House, Federal Reserve and Wall Street smart currencies.
The most obvious example is the price at the pump. National gas price stands at $3.41 a gallon today, up from $2.12 a year ago.
Here's What Joe Biden Can - And Can't - Do To Fight Inflation

Americans don’t like high gas prices, and they have a long history of blaming anyone in the White House, fair or not.

The big picture, there is a growing perception that inflation will continue to soar for many months to come, and some arguments prices will be even higher before they return to earth.

Wages are rising sharply amid a war for talent between companies. However, wages often do not rise enough to offset higher consumer prices.

Republicans and Democrats

America’s deeply polarized state may be fueling these inflationary concerns.

The University of Michigan’s Consumer Sentiment Index shows wide gap between parties in both the Trump and Biden administrations on key issues, including employment and inflation-adjusted income.
“Participants affiliated with the President’s party are in a very positive mood, and those in the opposition are in a very negative mood,” University of Michigan The report speak. “Partisan supporters of one or the other president either mention or ignore rising home and stock values, inflation rates, and income growth or mention or ignore employment or unemployment rates, and so far.”

But politics may not tell the whole story here.

Chamber of the United States: Trump is & # 39;  false & # 39;  on the infrastructure bill
Client sentiment is falling across the boardIn today’s University of Michigan survey, Democrats, Republicans and independents all score worse for the economy than they were in the spring of 2021. Republican sentiment is down. strongest.

And consider that consumer sentiment among Democrats stands at 87 today. The number is only slightly better than the 80s low in early 2017 after former President Donald Trump took office.

‘Major shock to the system’

Another part of the problem is that many Americans have never lived through sticker shock before. Inflation has softened unusually over the past decade, to the point that many economists fear a Japanese-style deflationary spiral will be difficult to break out of.

“Inflation is something a lot of people haven’t experienced in their lifetime. It’s a huge shock to the system,” said Markowska, an analyst at Jefferies.

For older Americans, all this talk of inflation brings back bad memories of the runaway inflation of the 1970s and early 1980s. That’s despite the fact that the situation today nowhere today than the spike in consumer prices at the time, peaked at 14.6% in 1980.

The irony about these inflation concerns: A big part of the reason inflation is here today is because demand is booming as the economy recovers from Covid faster than many imagined in March 2020.

Inflation won’t matter if the US economy is going through something like a slow recovery from the Great Recession.


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