The Bad Vibes Around a Good Economy

from The New York Times I'm Sabrina. tavernes and this is the. daily the American economy by many. measures is doing better than it's done. in years but for many Americans that's. not how it feels I mean I get comments. from people all the time that I could. stretch a dollar like no one else and. even now I'm struggling to do it yeah. when I'm talking about inflation I'm. mostly talking about the cost of. groceries milk used to be like a 89 a.

gallon it's now. 289 I'm like thank God I'm lactose. intolerant their feeling is pointing to. an enduring economic mystery why do. Americans feel so bad when the economy. is so good we're kind of just struggling. in what's left of the middle class today. my colleague Gina smik on a new way to. understand the. disconnect.

it's Thursday November. 30th so Gina we're going to talk today. about the economy and how despite the. fact that it's doing quite well. Americans are feeling pretty badly about. it so you know this is a puzzle we spent. some time on the show already thinking. about two years ago we did a show with. our colleague Ben Castleman at the time. the economy was still really emerging. from the pandemic inflation was really. high and the thinking at the time was. you know is a temporary thing Americans.

feel badly about the economy but it will. pass 2 years later here we are the. econom is actually doing better but. people feel bad still so help us. understand what's going on here right so. like you said this is a pretty confusing. situation overall we're actually seeing. some pretty decent looking economic. indicators at least by the economic. indicators we sort of traditionally look. at you know we're in a situation where.

inflation has come down quite a bit you. know we saw it Peak at above 9% in sort. of Summer of 2022 but now we're down at. like 3% a little bit above 3% we've seen. unemployment come down pretty sharply to. historically pretty low level wage. growth has been pretty solid recently. it's actually beating inflation a little. bit in recent months and yet despite all. of this people still seem to be feeling. really. bad so how bad exactly are people.

feeling like what's the damage in terms. of the sentiment here so one good way to. get a sense of that is to look at the. University of Michigan consumer. confidence numbers these are sort of a. baseline of how people are feeling about. the economy and they give that number as. an index in February 2020 so headed into. the pandemic we had a pretty good. economy and the index level was at 101. during the worst part of the pandemic. that level dropped to the below 70s it's.

now actually at. 63.8 so down even from the sort of worst. part of the pandemic that is pretty. remarkable and also very perplexing so. let's start to unpack this. Gina what is going on here so I think. that what is pretty clear is that the. traditional measures we look at to try. engage the economy and how we think. people should be feeling about the. economy are not really telling us the. full story here and so it's sort of.

incumbent upon us as reporters to sort. of look for other explanations and try. to understand why people feel so bad at. a time when the data look good and. consumers are still spending so we did a. couple of things we talked to a lot of. people we looked at a lot of polls and. we basically came up with three numbers. that we think explain what might be. going on here so what are they give me. the first one so I think one number that.

helps to explain this disconnect is 20%. and that's how much consumer prices. overall are up since late 2019 so this. is inflation exactly inflation but sort. of a four-year aggregate inflation which. is not traditionally the way we think. about that number but I think is useful. for thinking about this moment in. inflation and can you translate that for. me Gina the four-year aggregate number. yeah so it means that over the last four. years the total consumer shopping basket.

everything we buy is up by about 20% the. reason that matters is because it's a. much quicker pace of acceleration than. we're used to it means that people still. remember a time when prices were about a. fifth lower and yet they are facing. these considerably higher prices today. and so I think of it as sticker shock. inflation even though day-to-day price. increases have really slowed down. recently even though inflation numbers. are looking a lot better people are are. still experiencing these much higher.

price levels because we've had so much. inflation since the pandemic and so I. think that is explaining part of our. disconnect here so Gina let's just take. an example of something where people are. having that sticker shock so I think a. good one to use because it's something. that's really Salient for consumers is. gas if you were buying a 15g tank of gas. at the start of 2020 it would have run. you something in the range of.

$8 now if you're buying the same 15 Gall. take of gas it would run you about. $49 and so that's a pretty dramatic. increase and people really feel that gas. doesn't have a lot to do with any. government policy it's because of a. bunch of global forces that those prices. move but that doesn't mean people don't. respond to it it's something that people. see in their everyday lives right. another thing that people pay a lot of. attention to is the price of food and if. you look at food at home which is. basically grocery.

those prices are up nearly 26% compared. to late 2019. 26% yeah 26% so if you're driving if. you're paying for food if you're trying. to buy these sort of very basics of Life. they're a lot more expensive so bottom. line prices are still too damn high. right and it's a shock when you go into. the gas station or the grocery store so. what is your next measure how else. should we understand this so my next. number is 47% that that's how much home.

prices have risen nationally since late. 2019 Based on data from this company. called S&P K Shiller. 47% it's a lot right oh my God Gina I. mean it kind of is something you know. from just being in the world that. housing prices are high but the actual. number is. breathtaking yeah so I think what this. means for people on the ground and. particularly young people is that it's. just a lot bigger of a lift to purchase. that first home than it previously was. that's especially true because mortgage.

rates are a lot higher than they used to. be they're hovering around 7.3% right. now because of the fed's interest rate. increases and then I think it's also. true because if you're not already. owning a house you are likely renting. and if you're renting in America right. now that too has gotten a lot more. expensive since the pandemic and so I. think between mortgage rates and the. rent situation and housing prices some. people that we talk to feel like they're. on this sort of hamster wheel where it's. just harder and harder to sort of. achieve the trappings of the American.

dream so this is just this huge economic. problem precisely at the moment when. people expect to be crossing the. threshold into adulthood makes sense why. people would feel disaffected with the. economy right now if you're in that. situation and I think that it's being. exacerbated by a couple of other really. big ticket items that are also sort of. what you can think of as sort of. American Dream items you know we've seen. the cost of cars go up a lot and it. costs a lot more to finance the car. purchase and we've also seen that.

student loan payments have resumed you. know those were temporarily paused. because of the pandemic but I think. people got pretty used to not paying. those back and so we've now got this. Trifecta of really big expenses housing. cars and college and they're all kind of. eating into the household budget at. around the same time right and this is. particularly Salient for young people. they see all of these big ticket items. completely out of reach and are feeling. pretty despondent right and we're.

definitely picking up on that negativity. whether for this reason or for other. reasons in the polls and so a recent New. York Times Sienna College poll found. that 59% of Voters under 30 in key swing. States rated the economy as poor which. is substantially higher than you see in. basically any other age. group and you can definitely see that. playing out in some of the forums where. young people are really active like. social.

media which leads us to the third thing. I want to talk to you. about we'll be right. [Music]. back so Genie you just told me that the. next number to really explain why people. feel so bad about the economy despite it. being so good has something to do with.

social media so tell me about that yes. so the number here is. 43% which is the share of Tik Tok users. who say that they are getting their news. on that platform okay so Tik Tok big. social media platform 43% of people who. use that actually get all of their news. on that yeah and that's about twice what. that number was just a couple of years. ago and I think it fits into this. broader ecosystem because based on. Research from Pew we're seeing that.

something like 50% of adults are getting. their news or some news from social. media in general the reason that's so. interesting is that a lot of what we see. perform really well on social media when. it comes to economy and finance news is. really really negative do not tell me. the economy is booming the economy is. not booming when people are struggling. the way they are and I when I so for the. sake of Journalism I spent a few days. recently just sort of flipping through. social media channels I spent a day just.

kind of watching Tik Tok videos on the. economy and I saw a couple of consistent. themes or consistent tropes coming up. over and over again I genuinely hope. within my lifetime I witness the. collapse of capitalism you get a lot of. videos sort of questioning the whole. system did someone explained to me how. this just cost me over $70 at the. grocery store I got like 15 things what. used to be a maybe 50 $60 trip $109 you. get a lot of videos kind of the prices. are outrage and I don't even know how.

people afford homes it literally keeps. me up at night fatalistically talking. about how people are never going to be. able to afford a house ever in my life. not with the economy the way it is when. I was your age I already owned a house. yeah cuz it cost $6 your down payment. couldn't buy a frosty at an airport. Wendy's today the last time houses were. I think that's interesting because it. clearly reflects how people are feeling. about the economy you know those are the. things people are choosing to like and. to reshare and to sort of spread around. but it also means that that negative.

content is what's getting disseminated. and potentially sort of influencing how. people think about the world around them. right and the negativity really. amplifies those bad feelings right it's. like the lighter fluid on the Embers it. just makes everybody feel worse and it. makes it bigger yeah so one Trend that I. saw a lot of was the set of videos that. really kind of took off a couple of. months ago we are absolutely living in a. silent depression a silent depression. which play on the term quote unquote.

silent depression you know how I know. it's a silent depression right now. because our government doesn't even act. like there's anything wrong with the. economy when they talk the sort of. conceit Behind these videos is people. film themselves talking about the. economy and making comparisons about the. affordability of things like houses or. gas now versus in 1930s storing the. Great Depression era hence the silent. depression title very difficult time in. the American economy exactly we are. living in the silent depression and I'm.

going to explain what I mean new cars. are unaffordable new houses are. unaffordable to move to a new place and. rent somewhere else is. unaffordable and so the point of these. videos is to look at the cost of things. and basically to say how many years. would you have to work and save every. cent that you are making to buy a house. or a car and the upshot is that you'd. have to work longer in 2023 to buy those. things than you would have in 1930 is. that right so it is definitely the case. that affordability for really big. purchases like housing has gotten worse.

over the decades that said there are two. really big problems with these videos. problem number one is that the data. they're using is not very good we tend. to rely on government data for numbers. like this and those figures start around. 1940 I did try and fact check one of the. more popular videos in this vein and. when I asked for sources a lot of them. were kind of random numbers just strewn. across the internet and so I don't think. that these are pulling from particularly. reliable statistics okay so it sounds.

like this idea of Silent depression is. real for people but the numbers people. are sharing in these posts to explain it. are off yes so beyond the data problem. we've got this second problem which is. that these post is an incredibly. important caveat in the sense that the. economy is so much stronger now than it. was in the 1930s right and so it's not a. reasonable time period to compare 2023. to these videos are they may be powerful.

they may strike people as compelling but. they are not accurate I think that's an. important point to make here but I think. what is really relevant here is that. these videos are resonating with people. right like there's a reason they're. going viral and I think what we can take. away from this is that people find this. argument that it's become harder to. afford the trappings of everyday life to. be something that sort of resonates with. their economic experience okay so this. might be a pretty misleading comparison.

like the context is wrong but it's. tapping into something that's emotional. and therefore powerful yeah so this is. the interesting thing about social media. in the context of sort of economic. information I talked to some media. experts and they basically say that we. can't tell for sure at this stage we. just don't have the data but it's. possible that sort of the environment. and the conversation that's happening on. social media not only reflects how. people feel but could actually.

potentially help to drive it and so I. think that's why this is such an. interesting thing to keep an eye on the. sort of tone of the conversation here. both to understand why people are saying. what they're saying or thinking what. they're thinking but also to think about. how those perceptions are being shaped. so social media itself is actually. forming this negativity and the negative. view of the economy right so it's not. just like a mirror reflecting it back. it's actually convincing people that. things are bad we can't say that for.

sure but it could be hence your third. indicator exactly so Gina stepping back. here your new measures are pretty. persuasive you know this isn't a case of. economists being right and Americans. being wrong Americans are taking cues. from their own lives and what they're. seeing are Financial obstacles that feel. pretty insurmountable and that. translates into feeling down about the. economy right but I guess the question. in my mind now is. what will it take for people to feel.

good about the economy right so I think. that we are seeing some attempts at. policy responses that could help around. the edges here you know student loans. are a good example we know that people. feel bad about the fact that they have. to pay back those student loans but the. Biden Administration has taken efforts. to either make fewer people have to pay. back their student loans or make sure. that those payback plans and schedules. are less onerous than they previously. were so there's some things around the. edges that you can do like that I think.

there are some things that you can't do. that you hear from people they would. like to see but that don't actually work. in economic terms a big one is what. economists call deflation which is a. fancy way to say actually bringing price. levels down and how would that work yeah. so when you talk to households they will. often say well I really wish that the. prices of the things I buy every day. would just fall you know and that's. that's what I'm waiting for and the. reason that can't happen the reason you. don't want deflation in an economy as.

counterintuitive as that feels is if. prices fall across the economy then you. and I are going to stop spending our. money we're going to wait we're not. going to buy that you know t-shirt that. we want or that latte that we want we're. going to wait till next week when it's. cheaper and if everybody across the. whole economy is doing that. simultaneously it's going to grind the. economy to a standstill we're all going. to get fired because nobody's going to. be buying the things that we produce at. our jobs then everything's a disaster so.

you don't want deflation deflation is. terrible for the economy so then is this. sourness about the economy permanent is. this the new normal because your numbers. seem to be you know these big ticket. items that are really at the center of. people's lives they seem more like. really enduring features of the economy. than temporary blips you know I really. think it's an open question so these are. three trends that we decided to look at. because they seem like part of the. conversation but it could be that these.

aren't even the right ones that. something else is the thing that is. pulling confidence down and whatever it. is could worsen or dissipate you know. it's just a very uncertain moment I. think that part of what is going to be. important here is waiting to see if this. sort of resolves over time one thing. that we can definitively say is that. we've already got some glimmers of. hope you know since the sort of peak of. the in summer 2022 consumer confidence.

has picked up a little bit it has gotten. better than it was at its very worst and. so it could be the case that people just. need time to get used to higher price. levels to realize that inflation is. fading to sort of get used to sort of a. new normal with slightly higher prices. and that consumer confidence will sort. of readjust as that. happens so basically to wait for people. to adjust to this new normal. exactly it could just take a.

while Gina thank you thank. [Music]. you we'll be right. back here's what else you should know. today in Arizona on Wednesday two.

Republican County Supervisors were. indicted on felony charges related to. their attempts to delay the. certification of the 2022 election the. officials Peggy Jud and Tom Crosby were. charged with conspiracy and interference. with an election officer after they. ordered a hand count of ballots citing. conspiracy theories that had been raised. by local right-wing activists. Arizona's attorney general characterized.

their actions as quote repeated attempts. to undermine our. democracy and Henry Kissinger one of the. most consequential Statesmen in American. history who advised 12 presidents died. on Wednesday at the age of 100 Kissinger. who was from a German Jewish Refugee. family was the most powerful US. Secretary of State in the postwar era he. engineered America's opening to China.

negotiated its exit from the Vietnam War. and remade America's relationship with. the Soviet Union at the height of the. Cold War he was hailed as an ultra. realist who reshaped diplomacy to better. Serve American interests but he was also. reviled at having abandoned American. values particularly in the area of Human. Rights if he thought it served the. nation's. purposes today's episode was produced by.

Shannon Lynn Mary Wilson AA chaturv and. Eric krupy with help from Luke Vander. pluge it was edited by MJ Davis Lynn. with help from Lisa chow and Lexi di. contains original music by Marian Lozano. and Dan Powell and was engineered by. Alyssa Moxley our theme music is by Jim. brunberg and Ben Lanser of. wonderly special thanks to Lydia. Dillis that's it for the daily I'm.

Sabrina Tavern see you. tomorrow.