This economy — not to mention the stock market — could easily give you whiplash. Pick a measure of economic performance, and it’s as likely to be great as it is terrible.
Inflation’s running at 7%, near a 40-year high, while unemployment’s down below 4% — a level we’ve rarely seen in the past 50 years. Economic growth just came in sky-high, but consumer confidence in the economy remains in the dumps, with the University of Michigan consumer survey falling in January to its lowest level in over a decade.
What’s dragging down consumer sentiment the most right now is inflation.
A recent survey by Gallup finds that nearly 8 in 10 Americans expect inflation to keep rising in the next six months. Half of Americans say it’s causing them “hardship,” with 1 in 5 who earn less than $40,000 per year calling it “severe.”
“The economic confidence index is not the lowest we’ve had in the pandemic, but it’s pretty close,” poll editor Jeff Jones said of Gallup’s overall economic measure.
That’s in spite of some really good news for consumers: unemployment falling, wages rising, the economy expanding.
There are so many crosscurrents that are taking Americans on a wild ride, said University of Chicago consumer psychologist Ayelet Fishbach.
“We are on a roller coaster right now — it’s the omicron roller coaster or the inflation roller coaster. We don’t really know what will happen tomorrow,” she said.
Fishbach said people’s current economic situation might be good, but massive uncertainty makes them worried about the future.