The short answer – it’s complicated
By Joe Higgins, Quest 4 Quality
In America, the one price we all know is the price of a gallon of gasoline. It speaks from giant neon signs 24 hours a day. It gets reinforced into our heads every mile we drive on every other street corner in America. When we need gas, we pull into a station, put our credit cards into the pump and the price is fully displayed.
A consumer who doesn’t know the price of gas either does not own a car or drives a Tesla.
The same is true of certain food items: a loaf of bread, a dozen eggs or a pound of ground meat. We are very aware of what we spend in a grocery store. It is simple: You need gas to get to work and money to buy food to sustain your life. These are necessities for all of us and their prices thoroughly impact our budgets.
People tell me Americans are unhappy with the economy because food and gasoline prices are so high. I believe that to be true; the impact of inflation on our minds has been profound, more than I thought possible.
But I also have checked the research on this question of happiness and found that it is much deeper than just food and a gallon of regular gas.
Consumer sentiment had its fastest increase in 23 years in January. Consumer confidence hit a 12-month high at 114.3. Spending has been very robust, and unemployment at 3.7% is near a 50-year low.
The studies will say that the economy’s overall strength has had a negligible impact on our satisfaction in our post-COVID world.
Consumers say that while they are doing well now, they believe their longer-term job prospects, educational opportunities and financial security are at risk due to outside threats. Poor leadership running our economy, a dysfunctional government and global conflicts have Americans worrying about our future.
Younger consumers, especially millennials, are still living in the back bedroom of their parents’ homes. They feel priced out of the American dream of homeownership. Rising interest rates have now excluded 23 million citizens from being able to afford even a modest home.
This younger generation cannot afford a $2000 mortgage, plus excessive car payments, student loans, food or energy costs. Oh yeah, and forget about the necessary retirement savings because Social Security will be gone in 2032.
Collectively, it overwhelms millions who can’t afford today’s higher-priced lifestyle.
Yet to many economists, the negative outlook does not reflect the current economic life of most Americans. “There’s some justification for some negativity about the economy, but nothing resembling the amount of negativity seen in some of the survey data,” said Treasure Secretary Janet Yellen.
Human brains have a negativity bias that makes us look for bad news wherever we can find it. We seek articles on hurricanes, earthquakes, murders and bank failures. If there is bad news, we click on it twice as often as good news. A recent study said that this past year, big news companies like the LA Times, WSJ and television networks like CBS spent more press time on negative stories versus the good things about our economic growth.
So, the answer to why Americans feel so bad is complicated, and I can’t say if anything will improve it. High consumer confidence, robust spending, full employment and a historic rise in the stock market should reflect more upbeat moods among Americans, but they do not.
Don’t give up hope. Dispite Tuesday’s modest uptick, inflation is falling. The Fed will cut interest rates soon, and when they do, the lower 30-year mortgage will make housing more affordable. Wages are going up faster than inflation, and gas and food prices have somewhat moderated. Job creation was massive last month, layoffs fell and there are now 1.4 jobs for everyone looking for work.
So to sum it all up, there is a two word answer as to why is everyone felling so bad. It’s complicated.
Joe Higgins is a 44-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at Q4QwithJoe.com.
