For the sizable number of commentators who want to believe that the US public’s dissatisfaction with the economy — and, therefore, Joe Biden’s presidency — is simply a result of partisanship and media misinformation rather than being based in something real and tangible, last month proved a godsend. January’s edition of the University of Michigan’s nearly five-decade-long Surveys of Consumers showed a noted uptick in consumer confidence, reaching its highest point since July 2021 and seeing one of its largest gains on record.
The results were immediately seized upon as grist for yet another round of media coverage charging that the current economy is working well for everyone, and that the voting public’s unhappiness with this administration is simply irrational and doesn’t reflect reality.
As Paul Krugman, arguably the leading purveyor of this line of thinking, recently put it, “Americans finally seem to be noticing the good news.”
There’s a lot you could quibble with when it comes to just this reading of the survey. For one, this spike still puts consumer confidence quite a bit below its historical average, roughly on par with where it was when Trump lost the 2020 election, and ten points below the heady days of April 2021, when Biden’s approval rating was soaring — let alone the prepandemic Trump years. And a larger plurality of voters still expect bad times ahead for the economy than good.
In other words, while consumer sentiment as measured in the survey has improved a lot, the results actually confirm that people are still feeling iffy about this economy.
But in many ways, fixating on this one survey is beside this point. As with earlier waves of this genre of coverage, there are many, many signs that even as the rate of inflation is slowing down and unemployment is low, people are finding this economy tough to live in.
Surveys of Struggle
First of all, other recent major surveys paint a more somber picture of how people feel about the economy.
A late January 2024 Pew poll of more than five thousand Americans, for instance, asked the 72 percent of people who say economic conditions are either “fair” or “poor” why exactly they rated them so badly. A full 67 percent of them pointed to some variation of struggling to keep up with rising costs, with 28 percent saying “high inflation,” and a little more than one-fifth saying “high cost of living.” When asked what economic issues they are “very” concerned with today, 72 percent — the highest figure — chose the price of food and other goods, and 64 percent chose the cost of housing, both feelings that cut across partisan lines.
Axios’s “Vibes” survey, conducted by the Harris Poll in late December, turned up similar results: half of Millennial and Gen Z voters, nearly two-thirds of Latinos, and more than 40 percent of women are worried about their finances, with 49 percent of respondents overall saying they face more budget stress today than before the pandemic. Close to two-thirds say they feel anxious, resigned, or, most commonly, angry when shopping for groceries, where 72 percent say they most acutely feel the impact of inflation.
Republicans are among the groups who most rate their personal financial situation as “poor” (42 percent), much more so than the Democrats polled, suggesting some dimension of partisanship at play. But they are far from the only ones: that cohort also includes women, rural Americans, and, especially, renters — who, as we’ll see in a minute, have very concrete reasons to feel aggrieved.
A CBS News/YouGov poll from earlier in December — the very month that consumer confidence began its recent dramatic upswing in the University of Michigan survey — had 76 percent of respondents reporting that their income wasn’t keeping up with inflation. The vast majority of them said they based how they thought the economy was doing on what they and others around them were experiencing, and not the kind of top-line macroeconomic data the president and pro-Democratic pundits point to.
A Gallup poll from earlier this month, meanwhile, shows economic confidence at low levels even as it has made an uptick in the last couple of months. More importantly, it shows that Americans continue to report struggling with higher living costs: 63 percent say price rises have caused them financial hardship, the highest figure recorded since November 2021. That includes 17 percent who call it a “severe” hardship affecting their standard of living, also the highest figure recorded since that time. Lower-income Americans view it as a hardship at the highest rates, and are three times as likely as high-income Americans and nearly twice as likely as middle-income Americans to see it as a severe one.
In short, it’s possible to use the University of Michigan’s consumer confidence survey to make the case that the economy is working great for everybody — you just have to ignore the multiple other recent surveys that show that same US public explicitly saying they’re finding it hard to keep up with rising costs.
Beyond Gas and Groceries
Meanwhile, surveys about specific cost-of-living issues show that, besides groceries and gas, long-standing structural costs in American life are still a big concern for people.
Take health care. The first-ever Commonwealth Fund Health Care Affordability Survey, conducted over last April to July and released this past October, found that just over half of US adults said it was “very” or “somewhat” hard to afford health care. That includes 43 percent of those insured through their jobs, as well as 76 percent of uninsured people, a group comprising twenty-five million Americans, which would have grown since the survey was conducted, with 16.4 million having been kicked off Medicaid since last April. Nearly two in five (38 percent) said they put off or skipped treatment entirely because of the cost, and just under a third (32 percent) had medical or dental debt.
This roughly overlaps with the results of polling by the Kaiser Family Foundation from a year earlier. It suggests that even though the official rate of inflation has slowed, the lack of any kind of fundamental reform to the dysfunctional US health care system means that a core essential remains a major cost burden for many Americans.
What about student loan repayments, which restarted in October after having been on pause since the start of the pandemic and, with Biden’s student loan forgiveness stalled, are set to resume being a major monthly expense for Americans? A Pew Charitable Trusts survey carried out last fall saw 82 percent describe the payments as “very” or “somewhat” hard to afford, while 59 percent considered them more stressful than other bills, not least because they were more expensive. A separate University of Michigan survey found, after polling across October to January, that a total of 37 percent of student borrowers reduced either their saving or spending because of the payment restart.
One irony is that while itis debatable how much the Federal Reserve’s interest rate hikes actually contributed to taming price rises, they’ve definitely burdened Americans with even more expenses. A National Federation of Independent Business survey from December found that high interest rates had shot up dramatically as the leading financing complaint among small-business owners, while another University of Michigan survey found that concerns over high interest rates were going up at the same time that worries over higher prices had softened — and that, in the case of home-buying, people were for the first time more worried about them than they were about general inflation.
Signs of Insecurity
But we don’t need surveys to see that people are struggling or being held back by these costs. The evidence is all around us.
Around the country, demand for food banks is soaring. Minnesota saw a record number of food-shelf visits in 2023, a more than 30 percent increase on what had already been a record-setting number the year before. Whether Michigan or Ohio, Indiana or Texas, Los Angeles or Pennsylvania, the story has been the same: local charities seeing far more people flooding food pantries than they did during the pandemic, demand that continued to rise as 2023 drew to a close. These charities also consistently point to the same culprits: high grocery prices, unaffordable housing, and the gradual disappearance of pandemic-era federal aid, including cuts to the food-stamp program Biden made in his much celebrated 2023 budget deal.
The data bears this out. According to the US Department of Agriculture’s most recent report on household food security, covering 2022, nearly 13 percent, or seventeen million, of US households were food insecure that year, adding around 3.5 million households to their ranks since the year before. In fact, 2022 saw the first rise in food insecurity in a little more than a decade, having been gently declining in all the years since 2011. That meant forty-four million people were living in households where they struggled to get the food they needed because they lacked money and other resources, including thirteen million kids.
Meanwhile, after having declined markedly between 2019 and 2021 thanks to pandemic-era welfare spending, homelessness has now reached a record high. With federal money drying up and housing getting pricier, the number of homeless people in the United States soared 12 percent last year to more than 653,000 people. That’s both the highest number and the largest increase on record; before that, excluding the pandemic, the biggest spike in homelessness had been 2.7 percent in 2019.
Unsurprisingly, this rise in homelessness has come alongside persistently high eviction rates. According to data gathered by the Eviction Lab, which tracks in ten states and thirty-four cities, monthly evictions may be down from early 2023, but they’re still way, way up on what was recorded through much of 2020–21. California, Chicago, Massachusetts, and Oregon are just a few of the places where, in recent months, both filings and actual evictions have returned to prepandemic levels or exceeded them, a trend that had started being recorded earlier last year. Once again, this has gone hand in hand with the expiration of pandemic-era renter protection programs and the disappearance of federal money.
It’s also gone hand in hand with the ongoing housing affordability crisis. The most recent figure recorded by Harvard’s Joint Center for Housing Studies (JCHS) for how many renters are cost burdened (spending more than 30 percent of their income on rent and utilities) is 22.4 million as of 2022, an all-time high. Just over twelve million of those were “severely” burdened, or spending more than half their income on housing costs, also an all-time high.
This has been made worse by the Fed’s interest rate hikes, which the JCHS says has helped put monthly homeowner payments at more than $2,000 in most metro areas — whereas in 2020, they were less than that figure in most US metros. While US median rents are down from the highs they hit in 2023, they’re still up 22 percent from the prepandemic period. This rise in the cost of housing is reflected in the sentiment recorded by survey results we already covered earlier.
Normalcy, on Credit
So in spite of all these gloomy facts and figures, why do large numbers of Americans continue to say in many polls that at least their personal finances are in good shape, and why have they kept on spending like nothing’s changed?
One explanation might be that they’re simply going deeper into credit card debt. Axios’s “Vibes” survey, which saw most respondents describe their personal financial situation as “good,” also found that they were likely “spending in denial” — turning to credit cards in the face of a low bank balance, in other words. That large numbers of the public may be doing this is backed by both anecdotal and hard data.
For one, the already twenty-year-high level of credit card debt just went up again the last quarter of 2023, putting it at $1.13 trillion by the end of the year. Credit card balances, after plummeting during the pandemic when many paid down debt and bills, have steadily grown to well past their prepandemic level since late 2021, just as inflation was on the march.
A YouGov survey at the close of 2022 found that of the nearly three-quarters of people who added to their credit card debts over the previous years, 82 percent pointed to inflation or higher interest rates as the reason why. Similarly, Surveys of Consumers found there was a group of student borrowers — typically the most financially vulnerable ones — who responded to the restarting of repayments by spending more on credit.
Unfortunately, this course of action comes with its own financial burdens. More than a third of Americans now say they have more in credit card debt than in emergency savings, the highest figure in the twelve years that that particular Bankrate survey has been asking that question. And as they swiped more, the average credit card interest rate has gone up to the highest level in two decades, partly thanks to the Fed’s hikes. The result is that credit card and auto loan delinquencies are rising above prepandemic levels, with the share of US adults in financial distress on their credit card debts already having passed where that figure was during the Great Recession.
This may not be a ticking time bomb for the wider economy, but it certainly is one for those debt holders’ personal finances — and may prove to be one in the months ahead for people’s already shaky faith in the economy.
Despite the jump in consumer confidence the past two months, the overall picture of the US economy is similar to the one we’ve seen before when examining Americans’ current unhappiness: one whose undeniably positive top-line numbers mask a much less rosy reality.
It’s one where a large share of Americans across numerous surveys report that they are, in fact, unhappy and anxious about the explosion in living costs the past few years, not least in the unaffordable housing swallowing up more and more of their paychecks. It’s one where, as government assistance has faded away, demand for food banks is surging worse than during the pandemic, food insecurity has shot up for the first time in a decade, homelessness has rocketed to a record high, and evictions are returning to where they were before 2020. And it’s one where people have masked the precarity they are living in by plunging deeper and deeper into high-interest credit card debt, which many of them are proving unable to pay back.
None of these are indicators of a healthy, equally shared economy that’s working for everyone. And it would be stranger if, in light of it all, people did report widespread satisfaction with how things were going than what we’re hearing from them right now.
It’s not surprising that many commentators who want the president to prevail this year would jump on the consumer confidence news to wave all of this away. But it’s also not surprising if hectoring people to feel better about the economy, and offering nothing to alleviate their financial stresses, doesn’t change their minds come November.