Although there are signs that things are getting better, Americans remain pessimistic about the country's financial situation.
More young adults are employed full-time today than in 1993, according to Pew data. Weekly jobless claims from Jan. 8 to 13 were the lowest they have been since Sept. 22. And inflation is slowing.
These factors may not be as encouraging as they seem because of larger, systematic problems, says Kyle K. Moore, an economist at the Economic Policy Institute.
“The recent improvements come against a backdrop of decades of slow wage growth, rising inequality and a slew of misguided public investments that have made health care and education a source of economic stress,” Moore says.
Some “smart spending” such as stimulus packages helped pull America out of recession, but that hasn't solved the ongoing problems.
“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 illnesses that need to be treated.”
High prices remain the most thorny problem. Of Americans who felt the economy was good or bad, more than a quarter said this was due to high inflation. Another 21% blamed the high cost of living and 15% said it was due to low wages.
Supermarket prices may be falling, but they don't reflect a significant enough change for most shoppers, says Joceyln Kiley, deputy director of research at Pew. Frozen vegetable prices rose 6.1% and sugar prices rose 6.9% year-over-year, according to data from the U.S. Bureau of Labor Statistics.
“A significant portion of Americans are feeling the impact of the inflationary period, although some indicators differ,” she says.
Recent layoffs at major companies are also likely to influence Americans' view of the economy. Microsoft will lay off 1,900 employees from its gaming division and Citigroup will lay off 20,000 employees over the next two years. Google has cut several hundred jobs across its hardware and core engineering teams, and eBay has said it will cut 9% of its workforce this year.
In addition, there is still a risk of higher costs. For example, tuition at one public university in the state is double what it was 20 years ago, according to the College Board. Total health care premiums paid increased 18% in 2023 compared to 2018, according to data from the Kaiser Family Foundation. And 2023 was the least affordable year to buy a home, according to a Redfin report.
Although wage growth has risen faster than inflation in recent years, it is still not in line with productivity. According to the EPI, from 1979 to 2020, productivity increased by almost 62%, but wages only increased by about 23%.
“Wage growth hasn't matched productivity for 40 years, and that's because the labor movement has been decimated since the 1980s,” says Moore.
Wage growth has not matched productivity for 40 years.
Kyle K Moore
Economist at the Institute for Economic Policy
Black and brown Americans face greater financial challenges, he adds. According to EPI data, from 1979 to 2020, white workers saw wages increase by 30.1%, while Black and Hispanic workers earned only 18.9% and 16.7% more, respectively.
“There’s a reason why families are suffering from this economic anxiety,” he says. “Long-standing stagnant wage growth, lack of investment in goods and services and discrimination within the economy. That’s the background.”
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