America is near full employment with 14 million jobs added since early 2010. Gas prices are cheap. Home prices are rising. The stock market is near record highs. And the economy has grown … for seven years.
So why does everyone think the economy stinks?
In a recent AP poll, 54% of respondents described the economy as “poor.” In a new CNNMoney/E*Trade survey, a majority graded the economy as a “C” — or worse. In Gallup’s weekly survey, 60% of Americans said the economy was “getting worse,” the poorest rating given this year, and the worse since last August.
“The nation seems to be wallowing in a degree of economic pessimism,” said Will Marshall, president of the Progressive Policy Institute, a Democratic think tank.
The conventional explanation for this disconnect is that the benefits of the economic recovery have not been evenly distributed. The gains have gone to the rich, while those in the Middle Class face stagnant wages.
Another issue is that there is a difference between perception and reality. Often people will tell pollsters they don’t think the economy is performing well, but when questioned on their own personal financial situation, the story can be almost the opposite.
When Gallup asked in January whether an individual’s personal financial condition was better than it was a year ago, nearly half — 47% — said that it was. That was the highest level since before the economy collapsed in 2008. A recent AP poll found that 65% of those surveyed described the financial situation of their household as “good.”
“When people are looking at their own personal financial situation, they’re no longer worried about losing their jobs,” says Joel Naroff, president of Naroff Economic Advisors. “Nothing makes you feel better about things than the comfort that you’re likely to have your job tomorrow. ”
Even wages are finally beginning to grow.
Robert Shapiro, a long-time economic adviser to Democratic candidates, says overall Census wage data paints a grim picture because it includes earnings from students aged 15 all the way to retirees.
Incomes grew much faster for the nation’s workforce at its prime age between 25 and 59 years. “There’s no doubt if you actually delve into the data, the income of the majority of Americans went up at a pretty healthy rate in 2013 and 2014,” Shapiro said.