No, the Economy Isn’t Tanking

The illusion persists, despite all evidence. Americans are pessimistic about the economic future. They feel worse off than their parents were. Poll after poll shows that at best, only 20 percent of Americans say the economy is doing better than it was a year ago. More than 20 percent of Americans are doing better than they were a year ago, by many measures: Unemployment is lower. Wages are growing. Inflation is declining. This is true for Americans across ages and classes. These are tangible improvements in household income that should be cheering people up. And still, they are not. Why? What tricks are our minds playing on us that we can’t feel hopeful?

In this episode of Radio Atlantic, I interview Gilad Edelman, a senior editor at The Atlantic who covers the economy. Edelman was also stumped by the mystery. Typically as inflation improves, so does the American mood. But for the first time in decades, that didn’t happen. In a poll commissioned by The Atlantic, Edelman set out to figure out what factor the models weren’t accounting for. What explains the pessimistic lag? Is it related to the pandemic? Media coverage? An overall sense of doom? The answer he found was much simpler.

Listen to the conversation here:

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The following is a transcript of the episode:

Hanna Rosin: Happy New Year, everyone. This is Radio Atlantic. I’m Hanna Rosin. So, I’m always interested when people fall under collective delusion, like people who say crime in cities is out of control, that they’re way less safe than they used to be, when literally any statistic will show you that crime in most cities has been on a steady decline since the ’70s.

Well, we are under another collective delusion now. I’m talking about the bad-vibes economy, sometimes known on TikTok as the Silent Depression.

It is a genuine and genuinely unprecedented mystery. Because the economy, by many standard measures, is good. But according to poll after poll, including a poll done by The Atlantic, most Americans are feeling pessimistic about the economy.

Is the economy good, and we irrational beings are the problem? Or is the economy actually bad in some ways that we’re not seeing and not measuring, and we should just trust our feelings? That’s the mystery. And to help us understand it, we have Atlantic senior editor Gilad Edelman, who focuses on economics coverage. Hi, Gilad.

Gilad Edelman: Hello.

Rosin: Okay, Gilad. There is this persistent perception-reality gap in the economy now. Can you just lay it out?

Edelman: So until the last few years, Americans’ perceptions of the economy basically tracked what was going on in the economy, according to key measurements. So, the economy would do better; people’s subjective experience of the economy would go up. The economy would do worse; people would tell you it’s doing worse.

Now, something seems to