The Economy Is Great. Why Are Americans in Such a Rotten Mood?

livemint.com:

Last week we learned that the economy, far from sliding toward recession as economists had predicted over the past year, has actually picked up steam thanks to indefatigable consumers. Not only has economic output made up all the ground lost during the pandemic but it is above where it would have been had the pandemic never happened, judging by what the Congressional Budget Office projected in early 2020. The same goes for the job market.

The unemployment rate at 3.8% is only marginally above where it stood in January 2020. For a while, low unemployment overstated how healthy the job market was because so many people had left the labor force. But except for those over 64, they have mostly returned.

The share of the population ages 15 to 64 with jobs topped its prepandemic peak in August. So if the economy is so good, why are Americans so gloomy? Confidence readings are depressed. Some 69% of respondents to a Journal survey in Augustsaid the country is headed in the wrong direction.

President Biden’s approval ratings are mired around or below 40%, and approval for his handling of the economy is even lower. The most popular explanation for this dichotomy is that good feelings about jobs are more than offset by high inflation. There is a lot of evidence for this, but it is still not an entirely satisfying answer.

There are two longstanding surveys of consumer confidence. The index produced by the Conference Board, a business research group, incorporates attitudes about the labor market, but not inflation. And this index remains well above its lows around the 2008 and 2001 recessions.

No dichotomy there. By contrast, the University of Michigan sentiment index is at recession-like levels. It appears to be more sensitive to