Why Americans feel so bad about a growing economy
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Welcome “explosion.”
The term is a combination of the words “boom” and “recession”. It highlights how, according to creator Matt Stoller, the average American doesn’t feel like they’re reaping the benefits of an economy that’s humming along on paper.
Economic output and the stock market are rising, consumers are spending big, and the post-pandemic recession that many expected never materialized. But many people feel bad about their finances because their debt is at all-time highs, and the majority of Americans incorrectly believe that the country is in an economic slowdown.
“Traditionally, the economy has been doing really well,” said Stoller, an anti-monopoly advocate and research director at the American Economic Liberties Project, a nonpartisan think tank. “But ordinary people say it is not so.”
What’s in a name?
Stoller’s “boom” framework is intended to bring awareness beyond thought to the material financial challenges faced by those not in America’s top echelons, he said. Once that’s contextualized, Stoller said, it’s easier to understand why many Americans believe the national economic engine they help power isn’t moving them forward.
Stoller said the seemingly “boom” theory may help explain why data in recent years shows U.S. GDP growth isn’t associated with better consumer sentiment readings. This marks a significant break from the typical trend seen over the last six decades.
“I’ve never seen anything like this,” said Diane Swonk, chief economist at consulting firm KPMG. “I’ve been doing this for 40 years. That’s too long to ever see something like this.”
Inflation is not created equal
Helping bridge this disconnect, Stoller and the economists say, is this fact: Inflation is not one size fits all. Data shows that consumers face different rates of price increases depending on factors such as their income class or geographic location.
Grocery and housing inflation rose the most among headline inflation tracked by Morgan Stanley between 2020 and 2025. The bank found that these two categories will account for a disproportionately high share of low-income consumers’ spending in 2024.
Morgan Stanley economist Heather Berger said lower-income earners have historically seen higher inflation rates than better-off ones. The inflation gap widens when overall price growth is above the Federal Reserve’s 2% target, as has been the case for much of the last few years, according to the bank.
This cannot be dismissed as a special post-pandemic situation. Atlanta Fed expects food prices to rise this year increased by approximately 9% Stoller in poorer areas than in rich areas between the second quarter of 2006 and the third quarter of 2020. Stoller said more grocery stores in underserved communities could increase competition and lower prices, which could help reduce inflation inequality.
“If you see monopolization as a systemic feature of the American economy and price discrimination as a systemic feature of the American economy, it’s not that hard to jump from there,” Stoller said. “Happy people charge different prices than sad people.”
President Donald Trump has launched initiatives this year aimed at lowering housing and drug prices. Trump last month claimed there was “almost no” inflation in the United States, even though recent data showed rates higher than the 2% annual level considered healthy by monetary policymakers.
Economists and investors are watching to see how affordability initiatives improve ahead of midterm elections in November.
Meanwhile, households feel less isolated than they did when pandemic stimulus programs were introduced in the early 2020s, said Elizabeth Renter, senior economist at financial education platform NerdWallet. According to data released by the New York Fed last week, credit card debt reached a record level of $1.28 trillion in the fourth quarter of last year.
‘Hiring recession’
While high prices have been a perennial problem since the inflationary shock of the pandemic, consumers without financial safety nets have recently focused their concerns on inflation. job market.
Economists have described the current labor environment as an “unemployment boom” and a “hiring recession.” Fed Chairman Jerome Powell described it as a “low-hiring, low-fire” environment.
Data shows job openings in December fell to their lowest level since 2020, even as the stock market rebounded further. Because higher-income earners are more likely to own stocks, economists say continued gains in those assets could bolster economic confidence and support consumer spending. Meanwhile, anxiety dominates the rest of the country as the labor market tightens.
“If you have really high-value assets, you feel supported,” said Joanne Hsu, director of consumer research at the University of Michigan. “But if you don’t own any stocks, strong stock markets won’t be a problem for you.”
Federal statistics show economic output per worker hour reached all-time highs last year, surpassing the pandemic frenzy. But this could be bad news for workers: This increase could be taken as a sign that AI is increasing productivity, which could encourage companies to reduce headcount.
Nike, Amazon And POWER SUPPLY announced large-scale layoffs this year. Layoffs rose more than 200% from December to January, according to consulting firm Challenger, Gray & Christmas.
The labor share, or the percentage of economic output that trickles down to workers in the form of compensation, fell to new lows last year. Moreover, the gap between corporate profits as a slice of GDP and employee wages has reached its widest point in history. Michigan’s sentiment poll fell near all-time lows last year.
Despite the bad signals, strength in consumer spending helped the economy grow faster than expected, at 4.3% in the third quarter of 2025. But total spending is driven more than ever by the top 20% of Americans, according to Moody’s analysis. Fourth quarter GDP data will be released on Friday.
Last week’s January nonfarm payrolls report came in warmer than economists predicted and offered hope of stability in the job market. But these overall gains were driven primarily by the healthcare sector, which alone accounted for more than half of net growth.
‘More than one experience may be true’
Almost three-fifths of Americans believe the US economy is currently in bad shape A recession is generally defined as a period of multiple quarters of negative GDP growth. Guardian-Harris poll It was held in December. This is an 11% increase over a similar survey conducted in early 2025.
A new survey from Snap Finance shared exclusively with CNBC shows just how dire the outlook is for those at the bottom of the financial food chain.
Nearly a quarter of respondents described their current financial situation as “unstable” or “very unstable,” according to data released Wednesday. However, this rate rises to 41 percent for those with a credit score below 670 and to 54 percent for households with incomes below $50,000.
Snap Finance voted More than 1,400 people in December.
This may help explain the government’s growing skepticism of economic data. YouGov found Compared to August of last year, the number of Americans who trust federal reports on the economy decreased; This was in stark contrast to a few months ago. Trump fired former Bureau of Labor Statistics Commissioner Erika McEntarfer in August, implying that the agency manipulated labor market data under his leadership.
But NerdWallet’s Tenant cautioned against concluding that these reports, which are intended to be mass reads, are not necessary if they don’t match how an individual is feeling. These national data sets could help ensure, for example, the appropriate allocation of economic grants, he said.
“More than one experience may be true,” Renter said. “The economy could be doing pretty well, and millions of people are also pretty upset about it.”
