When discussing a country’s economy, some individuals rely on fiscal conditions or their own personal experiences to form their judgments. While it may seem strange for one person’s perspective to outweigh larger economic forces, our personal lens often becomes the most significant factor when evaluating the economy. For most people, it’s the bills and budgets they manage at their kitchen tables that resonate with them, rather than the latest Federal Reserve news conferences.
Inflation has brought attention to this phenomenon, as many people complain about rising prices despite a slowdown in inflation. Prices have not returned to pre-pandemic levels, which has contributed to negative views about the economy. The latest Consumer Price Index (CPI) report has only further supported this perception. Comparing the present to the pre-pandemic period provides a good marker for assessing individuals’ personal financial recovery. Unfortunately, many individuals’ recovery has been delayed, and the number of people describing themselves as “living comfortably and saving money” remains lower than before the pandemic. Additionally, more people report facing financial difficulties today compared to the past.
These factors have a significant impact on national economic ratings. Surveys indicate that individuals who perceive their own situations positively also tend to have a positive assessment of the national economy, while those experiencing difficulties have a more negative opinion. The middle-income groups have experienced particularly dramatic changes, with only slightly over half of individuals in the $50,000 to $100,000 income bracket having any money left over after expenses.
It is worth noting that these measures may not fully capture all the factors relating to income and expenditures. It is possible that people have collectively adjusted their spending habits to mitigate financial challenges. Although these measures may appear relatively stable over time, it’s essential to consider whether individuals’ standard of living has declined.
Partisanship also plays a role in people’s evaluations of the economy. Currently, Democrats who are struggling financially are more critical of the U.S. economy, even with their party in power, compared to beleaguered Republicans in 2019. This lack of overwhelming support within his own party may be a reason why President Biden’s handling of the economy and inflation remains under scrutiny.
While macroeconomic indicators may suggest that the U.S. economy is recovering from the pandemic’s effects, many individuals have yet to experience a personal return to normalcy. This personal evaluation of the economy differs from broader economic trends. The CBS News/YouGov survey conducted using a nationally representative sample in September 2023 provides insights into people’s perspectives on the economy.