Consumers are cranky though the economy is OK
Think back to 2019. There was a lot going on: A fire at Notre Dame. A new royal baby. An impeachment and the Mueller Report. That whole college admissions scandal. But do you remember how you felt about how the economy was doing? Odds are, the answer was “decently well.”
And, in some ways, it’s beginning to feel a lot like 2019: We’ve got pre-pandemic levels of unemployment, solid GDP growth, and we’re much closer to what inflation looked like in the before times.
But one thing that just isn’t what it used to be? How the American consumer feels about the economy. In 2024, consumers are cranky.
Consumer sentiment about the economy, as measured by the University of Michigan, is down 30% from 2019. And economists like Aditya Bhave with Bank of America Global Research say it’s out of whack with other indicators.
“If you look at these levels of sentiment relative to where they’ve been in history,” he said, “they would point to much weaker consumer spending than what we’re seeing.”
So why are consumers still so grumpy? Well, after a bout of elevated inflation, there’s something sticky about all this sticker shock.
“When inflation is high, the rational choice is to pay attention to inflation, and then you have to make choices about buying things now or later,” said Bhave.
In a poll, some consumers reported wanting prices to come down so badly, “that even if it would cause a recession, 37% of them still want prices to go down,” said Morning Consult economist Sofia Baig.
But she does think sentiment should improve in 2024: “Since wages and real incomes are going up. And inflation comes back down. And we kind of get used to price levels where they’re at now.”
That is barring any major shocks — with presidential elections coming in November and plenty of other things to create economic uncertainty.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
