Americans’ Economic Sentiment Hits Postwar Low Amid Inflation Concerns
A recent report from Vox cites new surveys showing American economic sentiment has reached its lowest level since the University of Michigan began tracking it in 1952, driven overwhelmingly by high prices and the cost of living. A CNN survey found that only 47 percent of respondents believe most people can get ahead through hard work, down from 67 percent a decade ago. President Donald Trump’s approval ratings on the economy have also hit new lows, with CNBC showing 39 percent and CNN showing 30 percent. These negative feelings persist despite decent GDP growth, strong job numbers, and a stock market near all-time highs. In an open-ended question, 76 percent of CNN respondents cited affordability as their family’s biggest economic problem. New data released Tuesday showed inflation at its highest level in three years, and inflation has outpaced wage growth for the first time in three years, according to Navy Federal Credit Union chief economist Heather Long. Two economists, Jared Bernstein and Daniel Posthumus, have proposed a theory that Americans’ expectations for stable prices, built over four decades of low inflation, have made the 2020s inflation feel like a fundamental betrayal.
What’s reported
The University of Michigan consumer sentiment survey recorded its lowest level ever last month, according to the report.
A CNN survey found 47 percent of respondents agreed that most people can get ahead through hard work, compared to 67 percent in 2016.
President Trump’s economic approval was 39 percent in a CNBC poll and 30 percent in a CNN poll.
GDP growth and jobs numbers remain decent or good, and the stock market is near all-time highs.
76 percent of respondents in a CNN open-ended question cited affordability as the biggest economic problem for their family.
New data showed inflation at its highest level in three years, partly due to higher energy prices from the Iran war.
Inflation outpaced wage growth for the first time in three years.
Producer prices rose the most since 2022, which can indicate future price increases for customers.
Economists Jared Bernstein and Daniel Posthumus published a theory that Americans’ expectations for stable prices over four decades have made recent inflation feel like a betrayal.
Open questions
The article notes a puzzle about why consumer sentiment is worse now than during more severe inflationary periods of the 1970s. The theory proposed by Bernstein and Posthumus offers an explanation but does not confirm whether it fully resolves the puzzle. Whether the recent inflation data signals a prolonged period of high prices also remains uncertain.
Misconceptions
The article addresses the misconception that Americans’ negative economic sentiment can be explained by decades-long trends like rising inequality, the Great Recession’s aftermath, social media negativity, or political partisanship. It notes that these explanations do not fit the timing because sentiment was high in the mid-to-late 2010s when those factors also existed.
Key figures
Heather Long, chief economist of Navy Federal Credit Union
Jared Bernstein, economist
Daniel Posthumus, economist
President Donald Trump
President Joe Biden
Sources: vox.com
