Americans’ Economic Anxiety Shouldn’t Surprise Anyone

The data says everything is okay. According to the Federal Reserve, at the end of 2021, 80% of Americans were either doing okay or living comfortably. More people are able to cover an unexpected $400 expense with cash or cash equivalent.

There is more data from the Bureau of Economic Advisors. Personal income was up in May, disposable income was up and personal consumption expenditures went up.

Even though there is a record number of jobs looking for candidates, the unemployment rate is still falling. The country is experiencing the strongest period of economic growth in 40 years, the strongest labor recovery in modern history, and progress on reducing the deficit, according to the director of the White House National Economic Council.

Consumers' confidence fell in May, as did their expectations of the short-term future for income, business, and labor conditions, by the Conference Board's ongoing measurement. As Americans' job security confidence and employment outlook improved, their expectations for their own financial futures fell.

The atmosphere is very similar to a horror movie. Characters move about and everything seems fine on the surface, but there is a sense of dread and slowly but inexorably perception moves from sunny to cloudy.

Data is inexact and flawed, and the evidence that economic cheerleaders bring up is often one-sided. While most families with children were getting child credit checks and not long after they received their last Covid-19 relief, the Fed uses surveys from October and November of 2021. Pandemic rescue cash is quickly diminishing, but bank accounts still have some worry about it.

The percentage of disposable income that goes into personal savings has gone down over the course of the last five years. According to the Federal Reserve, banks have seen huge increases in credit card debt, with an annual rate up 10.2% in January and then 17.3% in February and 29.5% in March.

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In the first quarter of 2021, the drop was 3.3%, after a 10.9% drop in 2020. The graph below shows that the country is close to the record debt it had before the recession.

Many people outside the ranks of professional politicians and economists face increasing difficulty making ends meet with inflation. They burn through savings and get into debt with the hope that things will get better soon.

Consumers are spending more Everything has become more expensive because of inflation. The average cost per bag that leaves the store with you is high when you shop for groceries. The real average earnings were down in April.

You should look at housing. Forbes contributor Richard McGahey noted in March that the asking rents were up 15.2% in January. About a third of the country faces rents that inexorably move upward at rates boosted by levels of inflation in property prices, despite the fact that the majority of homeowners don't.

Faced with the most rapid price increases since the early 1980s, many U.S. households are facing difficult choices. Fuel prices went up by almost one-third between January 3 and April 4, 2022. We could see sustained changes in household spending if this lasts the entire year. The headline said, "Rising prices for fuel, rent, and food eat into families' financial gains."

The New York Times reported that many experts think the economy is overheated and needs to be slowed with higher interest rates. Even as prices rise, the workers are still willing to spend money to get what they need for daily life. The labor market needs to return to a balanced state. Even as people are sliding backwards, the economy can't afford to keep increasing wages.

Average consumers have a common sense of how their personal economics is feeling. There was a hint of danger around the corner. Their gut feeling is far ahead of what the professional number crunchers see.