Why Americans are feeling the economic gloom — and thinking about deflation

globalnews.ca:

Inflation has reached its lowest point in two and a half years. The unemployment rate has stayed below four per cent for the longest stretch since the 1960s.

And the U.S. economy has repeatedly defied predictions of a coming recession.Yet according to a raft of polls and surveys, most Americans hold a glum view of the economy, and the disparity has led to befuddlement, exasperation and curiosity on social media and in opinion columns.Last week, the government reported that consumer prices didn’t rise at all from September to October, the latest sign that inflation is steadily cooling from the heights of last year.

A separate report showed that while Americans slowed their retail purchases in October from the previous month’s brisk pace, they’re still spending enough to drive economic growth.Even so, according to a poll last month by The Associated Press-NORC Center for Public Affairs Research, about three-quarters of respondents described the economy as poor. Two-thirds said their expenses have risen.

Only one-quarter said their income has.The disconnect poses a political challenge for President Joe Biden as he gears up for his re-election campaign. Polls consistently show that most Americans disapprove of Biden’s handling of the economy.Many factors lie behind the disconnect, but economists increasingly point to one in particular: The lingering financial and psychological effects of the worst bout of inflation in four decades.Despite the steady cooling of inflation over the past year, many goods and services are still far pricier than they were just three years ago.

Inflation — the rate at which costs are increasing — is slowing. But most prices are high and still rising.Lisa Cook, a member of the Federal Reserve’s