Despite indicators that things are looking up, Americans remain pessimistic about the country’s fiscal situation.
More young people are employed full-time today than in 1993, according to Pew data. Weekly jobless claims from January 8th to January 13th were the lowest since September 22nd. Inflation is also slowing.
Kyle K. Moore, an economist at the Economic Policy Institute, says these factors may not be as encouraging as they seem because of larger systemic issues.
“Recent improvements come against the backdrop of decades of slow wage growth, widening inequality, and misdirected public investment in health and education that is causing economic stress. It’s happening,” Moore said.
The United States has pulled itself out of recession thanks to stimulus and other “smart spending,” but deep-seated problems remain.
“The economy is not sick right now,” Moore said. “We don’t have the flu, but that doesn’t mean we don’t have chronic conditions that need treatment.”
High prices remain the most vexing problem. Among Americans who say they feel the economy is in fair or bad shape, more than a quarter say it’s because of high inflation. He also said 21% attributed it to the high cost of living and 15% to low wages.
Supermarket prices may be falling, but they don’t reflect a sudden enough change for most shoppers, said Joseine Kiley, associate director of research at Pew. Frozen vegetable prices are up 6.1% from a year ago, and sugar prices are up 6.9%, according to data from the U.S. Bureau of Labor Statistics.
“Even though some indicators are moving away from the inflationary period, a significant number of Americans are feeling the effects of the inflationary period,” she says.
Recent layoffs at major companies are also likely having an impact on how Americans view the economy. Microsoft is laying off 1,900 employees from its gaming division, and Citigroup plans to lay off 20,000 employees within the next two years. Google is cutting hundreds of jobs from its hardware and central engineering teams, and EBay announced it will cut 9% of its workforce this year.
Moreover, even greater costs are still being imposed. For example, tuition at public universities in the state is double what it was 20 years ago, according to the College Board. Total health insurance premiums paid in 2023 increased 18% from 2018, according to data from the Kaiser Family Foundation. And according to a report from Redfin, 2023 was the least affordable year to buy a home.
Although wage growth has outpaced inflation over the past few years, it still does not match productivity. From 1979 to 2020, productivity increased by almost 62%, but wages only increased by about 23%. According to data from EPI.
“Wage growth has not matched productivity for 40 years, and that’s because the labor movement has declined significantly since the 1980s,” Moore said.
Wage growth has not matched productivity for 40 years.
Kyle K. Moore
Economist at the Economic Policy Institute
Black and brown Americans face deeper economic challenges, he added. From 1979 to 2020, wages for white workers increased by 30.1%, while wages for black and Hispanic workers increased by only 18.9% and 16.7%, respectively. According to data from EPI.
“There’s a reason why families are experiencing this financial insecurity,” he says. “This is due to a long period of stagnant wage growth, underinvestment in goods and services, and discrimination within the economy.”
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