Economy backlash: the real reason Americans hate it

consumer sentiment – Polling and sentiment gauges show Americans feel worse than ever, despite decent growth and job data, driven largely by costs and broken expectations.

Americans’ economic misery is no longer just a talking point—it’s showing up in consumer mood at record lows, even as some headline indicators remain relatively strong. The latest survey readings are putting the focus on a problem that people say hits home every day: the price of living.

In results released last month. the University of Michigan’s long-running monthly gauge of consumer sentiment reached the lowest level it has recorded since the survey began in 1952.. The finding adds to a broader sense that the country’s economic outlook is darkening in the public imagination. not merely in policy debates.

Separate polling this week captured the same shift toward pessimism in a more direct way.. A CNN survey asked whether people can get ahead if they work hard. and 47 percent agreed—down sharply from 67 percent who said the same a decade earlier in 2016.. Importantly. the movement toward doubt appeared broadly similar across age. race. and gender. suggesting the frustration is not confined to a single demographic group.

At the same time, President Donald Trump’s economic approval ratings have slipped to historic lows in recent surveys.. Reports based on polls from CNBC and CNN showed ratings bottoming out at 39 percent and 30 percent. respectively. reflecting an electorate that is increasingly skeptical that the economy is working for them.

The public mood is complicated by a disconnect between sentiment and several widely watched “topline” economic measures.. Growth and jobs data have continued to look decent or even strong in recent reporting. while the stock market has remained near all-time highs.. Yet those signals have not translated into calmer consumers, underscoring how strongly daily costs are driving perceptions.

In that context, the most frequently cited economic grievance is affordability. In an open-ended question in the CNN survey, 76 percent of respondents said affordability—showing up in variations of the same theme—was the biggest economic problem facing their family.

The worry is not only that prices feel too high, but that the situation is not clearly improving.. New data released Tuesday indicated inflation is at its highest level in three years. and only partially attributed to higher energy costs tied to the Iran war.. Economists flagged another troubling pattern: inflation has been outpacing wage growth for the first time in three years. according to Heather Long. chief economist of Navy Federal Credit Union. who made the point in a public post.

Further evidence came Wednesday with a separate inflation snapshot from the producer side. Producer prices—often viewed as wholesale inflation—rose the most since 2022, which can foreshadow renewed pressure on prices faced by consumers later on.

Why that matters is part of a wider puzzle economists and analysts are still working to explain: how a wave of inflation and cost stress in the 2020s is. in public perception. overwhelming other indicators—so much so that consumers report feeling worse than they did in earlier inflation stretches that were. in some cases. more prolonged and severe.

One explanation recently put forward by two economists centers on what they call a “vibe gap. ” arguing that Americans’ expectations for the economy changed in ways that left them more outraged than ever when conditions didn’t match what people believed would happen.. If the theory is correct. it suggests the recovery in consumer sentiment could take longer than the improvement suggested by traditional metrics.

So when did the negativity set in?. The report draws a line from earlier years when Americans seemed less distressed. even amid public life that could still be sharply polarized.. The University of Michigan index. described as a benchmark for sentiment that reflects how respondents answer multiple questions. was regularly in the nineties during President Barack Obama’s second term and President Trump’s first term.

Even during Trump’s first term. the index remained comparatively high. and the measure only began to fall dramatically around the pandemic years.. The report notes that the series hit a low point of 53 in the summer of 2022. after dropping during the pandemic and. even more sharply. during the post-pandemic inflation associated with the Biden years.

As Biden’s term continued. the index gradually improved. though it stayed well short of the peaks seen in the 2010s.. The report also says Trump’s second term was followed by another sharp decline. with factors described as starting with tariffs and later intensifying with the Iran war and surging gas prices.

While Americans’ anger at prices is hardly surprising, economists say the depth of the reaction is.. Their argument is that the current economy. based on measures like GDP and job growth. does not resemble the worst periods in modern history.. They also point out that inflation in the 1970s was both more severe and lasted longer than the 2020s. yet the sentiment index did not hit an all-time low then.

Even more challenging for economists is that the consumer sentiment index used to track more closely with “hard” economic data. In the 2020s, that relationship appears to have weakened, leaving the mood of households out of step with many headline statistics.

The “vibe gap” explanation from economists Jared Bernstein and Daniel Posthumus suggests the heart of the problem is expectation. Their theory is built around a gap between what Americans believed prices and economic conditions would look like over time, and the reality they experienced.

The report links the current expectations to the period that followed the inflation crisis.. After the Federal Reserve brought inflation under control—starting in the late 1970s and early 1980s—prices stayed relatively low and predictable for decades.. That created a kind of economic norm in which Americans compared today’s prices not only to the last few years. but to a long stretch of steady increases.

For many workers, the report notes, this was essentially the only economy they had ever known.. The economists argue that the generations now in the labor force may not remember a time when inflation broke in a sustained way. and that the experience of the 2020s can therefore feel less like a normal economic downturn and more like something fundamental failing.

To test their expectations-focused theory. Bernstein and Posthumus reportedly added a variable that accounts for consumers’ expectations for price levels over time.. Their model, the report says, predicts recent declines in sentiment more effectively than approaches that rely on other indicators alone.

Seen through that lens. the inflation of the 2020s can appear not merely as a temporary headwind. but as a betrayal of the predictability that households came to rely on.. That interpretation also helps explain why consumers can remain dissatisfied even when certain economic figures look comparatively healthy on paper.

The latest ominous inflation readings—both the highest level in three years and signs that producer inflation is rising—reinforce the report’s warning that the pressure on household budgets may not be fading as quickly as consumers hope.. If prices continue to run ahead of wages. it could keep widening the gap between what people expected and what they are getting.

For the political system, the implications are immediate.. Approval ratings for economic leadership are already at record lows in recent polling. and widespread pessimism about whether hard work still leads to getting ahead suggests frustration is feeding broader doubts about the American dream itself—not just annoyance at a single headline number.

For households, the stakes are more personal and practical.. When affordability becomes the dominant economic worry, sentiment can stay brittle even when national averages improve.. The report’s core message is that Americans aren’t just reacting to today’s economy—they’re reacting to a sense that the rules they expected to apply for decades have stopped working.

consumer sentiment economy approval inflation expectations cost of living University of Michigan index wage growth producer prices