Why Do Americans Feel So Pessimistic About the Economy?
February 27th, 2024
Wages are going up. The stock market is booming. Labor is racking up major wins. Inflation is cooling. The United States has the best recovery from the covid-induced inflation in the world. Why are Americans so pessimistic about the economy as a whole?
To paraphrase James Carville, “It’s the two economies, stupid.”
To those of us who know history, this makes a lot of sense. In the aftermath of NAFTA, CEOs opted to move entire factories and supply chains to Mexico and entire communities were left out of work once their main industry left. While NAFTA and the Great Recession amplified these practices, it wasn’t a new concept. Wall Street and Corporate America had been moving their operations and new investments into the Sun Belt for quite some time, owing to anti-labor policies and lax environmental standards.
Economic inequality has been exploding since 1980 and the middle class has been squeezed more and more, to the point where the middle of the middle class can arguably have slipped into (an albeit well-paid part of) the working class. More than half of Americans making six figures live paycheck-to-paycheck. This is too large a portion of high earners to be written off as purely “lifestyle inflation” or bad investments. Rather, the current economic system is set up to advantage those who can best guess how industries will perform, not those who make wealth possible.
From 2011 to 2023, the cost to simply maintain the exact same standard of living cost an additional $11,000.
Credit: BLS
Let’s break this down and talk numbers for a minute:
Since 1979, American workers’ wages have gone up 17.5% while productivity has increased by 61.8%
From 1980 to 2020, the cost of collegiate tuition has increased by 180%
In the last 20 years, the cost of medical care has increased by 114%
Rent has gone up 64% since 1960
Is it any surprise that people don’t see the economy as doing well? After decades of trimming extraneous expenses or giving up on certain luxuries, there really isn’t much left to cut. At the end of the day, you can either cut expenses or increase revenue, usually both. There’s a reason why more and more Americans are working two full-time jobs.
Most Americans view the economy negatively is because it is pretty negative. Being lectured that $15 an hour was pie-in-the-sky and a fantasy a decade ago would barely cover bills. In order to actually get to a place where average working person can cover all their bills and put aside a little for savings, you would need to seriously consider having a minimum wage of $20 or $25 an hour. That would be step one.
If only it was an election year where a candidate for the highest office in the free world could do something about that.