Why Americans Feel Worse About the Economy Despite Strong Growth and Low Unemployment

Americans’ economic sentiment has plunged to historic lows, with the University of Michigan’s consumer sentiment survey recording its lowest level ever in the postwar era. The latest data, released last month, reflects deepening pessimism across all demographics—age, race, and gender—regarding the feasibility of achieving the American dream through hard work.

Support for President Donald Trump’s economic policies has also hit record lows, with approval ratings at 39% in a CNBC poll and 30% in a CNN survey. This discontent persists despite robust economic indicators: GDP growth remains strong, unemployment is low, and the stock market is near all-time highs.

So, why are Americans so furious? The answer lies in high prices and the cost of living. In a CNN survey, 76% of respondents cited affordability as the biggest economic problem facing their families. Recent data suggests this issue is worsening:

• Inflation reached its highest level in three years, driven in part by rising energy prices due to the Iran war.
• For the first time in three years, inflation has outpaced wage growth, according to Heather Long, chief economist of Navy Federal Credit Union.
• Producer prices, a leading indicator of future consumer costs, surged to their highest level since 2022.

While inflation has been a persistent challenge in the 2020s, its psychological impact appears more severe than in past periods of prolonged or intense inflation. Economists propose a theory they call the “vibe gap” to explain this phenomenon: over the past few decades, Americans’ expectations for economic prosperity have shifted, leaving them more outraged than ever before by rising costs.

If this theory holds, consumers may continue to feel economic dissatisfaction for the foreseeable future. The roots of this negativity may lie in long-term trends such as rising inequality and the country’s sluggish recovery from the Great Recession. Alternatively, broader societal shifts could be reshaping economic perceptions in ways that defy traditional indicators of prosperity.