{"id":11564,"date":"2023-11-09T09:42:50","date_gmt":"2023-11-09T09:42:50","guid":{"rendered":"https:\/\/infundpros.com\/business\/americans-say-the-economy-stinks-but-theyre-spending-like-its-great\/"},"modified":"2023-11-09T09:42:51","modified_gmt":"2023-11-09T09:42:51","slug":"americans-say-the-economy-stinks-but-theyre-spending-like-its-great","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=11564","title":{"rendered":"Americans say the economy stinks. But they\u2019re spending like it\u2019s great"},"content":{"rendered":"
\n

\n Editor\u2019s Note:\u00a0A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free,\u00a0<\/em>here<\/em>.\n<\/p>\n

\n There\u2019s a conundrum that economists and political strategists have been chewing on for more than a year: The economy is good, but Americans say it\u2019s lousy.\n <\/p>\n

\n Despite all kinds of positive news on inflation (it\u2019s slowing), the job market (best in a generation) and consumer spending (still robust!), Americans can\u2019t seem to shake their despair, at least whenever they answer calls from pollsters.\n <\/p>\n

\n In a CNN poll released Tuesday night,\u00a072% of all Americans say things in the country today are going badly, and 66% said the economy will be \u201cextremely important\u201d when deciding who to vote for next year.\n <\/p>\n

\n But just 2% of voters say the economy is excellent, according to a separate New York Times-Siena College poll released earlier this week. That could be a big problem for Democrats trying to peddle Bidenomics. (although Democrats put up a pretty strong showing in Tuesday\u2019s elections.)\n <\/p>\n

\n But there\u2019s a conundrum within the conundrum, which is that, despite what Americans say, they are not behaving like a people particularly worried about the economy.\n <\/p>\n

\n Folks don\u2019t tend to shell out thousands on Taylor Swift tickets and steak dinners and vacations when they\u2019re worried about where their next paycheck is coming from. But that is exactly what we the people have been doing, month after month, even in the face of higher borrowing rates.\n <\/p>\n

\n Consumer spending, the biggest engine of the US economy, powered US gross domestic product to grow at a stunning annualized rate of\u00a0nearly\u00a05% last quarter \u2014 more than double the quarter before that.\n <\/p>\n

\n Of course, to pay for it all, Americans are dipping into some dangerous places \u2014 something you don\u2019t typically do unless 1) you\u2019re desperate, or 2) the labor market is booming and you feel like your job is secure.\n <\/p>\n

\n Although many fall into the first bucket, plenty are spending like drunken sailors because they know they can. That\u2019s why Americans are pulling money from their 401(k)s\u00a0at an alarming rate\u00a0to pay the bills.\n <\/p>\n

\n Meanwhile, Americans are\u00a0piling up record credit card debt and falling behind on those payments. Balances overall have hit a\u00a0fresh high of $1.08 trillion<\/strong>.<\/strong>\n <\/p>\n

\n This turducken of conflicting sentiments isn\u2019t some obscure academic problem for economists. It\u2019s also a political puzzle that could shape the 2024 presidential race.\n <\/p>\n

\n So, what gives?<\/strong>\n <\/p>\n

\n According to the Fed chair Jay Powell, \u201cpeople hate inflation.\u201d\n <\/p>\n

\n Which is true, but it\u2019s squishy. People don\u2019t really give a hoot about inflation when it\u2019s a barely perceptible 2% or even 3.7%. They care about\u00a0prices,\u00a0<\/em>which are not falling.\n <\/p>\n

\n Your morning cup of coffee still costs 60 cents more than it did before the pandemic, and there\u2019s no incentive for Starbucks (or wherever) to bring prices down now that they know you\u2019re willing to pay for it. That\u2019s business, and it\u2019s something neither Democrats nor Republicans can change. (And let the record show that selling addictive stimulants at an outrageous markup is a very solid business plan.)\n <\/p>\n

\n Paying more for coffee is no fun, of course, but there are deeper issues that appear to be feeding our collective malaise.\n <\/p>\n

\n Not least: Housing \u2014 the thing Americans are told from birth is the key to building wealth \u2014 hasn\u2019t been this expensive since 1984, thanks to a double whammy of high prices and high mortgage rates. It now takes nearly 41% of the median household\u2019s monthly income to cover the principal and interest payment\u00a0on a median-priced home.<\/strong>\n <\/p>\n

\n For young people living paycheck to paycheck, the dream of homeownership (and the financial security that comes with it) feels frustratingly out of reach. And that\u2019s a psychological wound that may take a lot more than monetary policy to fix.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Editor\u2019s Note:\u00a0A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free,\u00a0here….<\/p>\n","protected":false},"author":1,"featured_media":11565,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-11564","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nAmericans say the economy stinks. But they\u2019re spending like it\u2019s great | inFundPros<\/title>\n<meta name=\"description\" content=\"Editor\u2019s Note:\u00a0A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free,\u00a0here. 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