We begin today with Paul Krugman of The New York Times wondering why Americans remain negative about the state of the economy.
Since December 2021 the U.S. economy has added almost six million jobs while the unemployment rate has fallen from 3.9 percent to 3.4 percent, a level not seen since the 1960s. And no, unemployment isn’t low because Americans have dropped out of the labor force: The percentage of adults either working or looking for a job has declined, but that’s almost entirely a result of an aging population, and labor force participation is right back in line with prepandemic projections.
[…]
But inflation, while still elevated, has come way down. The inflation rate over the past six months was 3.3 percent, compared with 9.6 percent last June. The price of gasoline, a major political talking point last year, is now more or less normal compared with average earnings.
And people have noticed. In October, 20 percent of Americans named inflation as the most important problem facing the nation; that’s now down to 9 percent.
So what’s going on? The general rule seems to be that Americans are feeling good about their personal situation but believe that bad things are happening to other people. A Federal Reserve study found that in late 2021 a record-high percentage of Americans were positive about their own finances while a record low were positive about the economy. We don’t have results for 2022 yet, but my guess is that they’ll look similar.