Everything’s fine, says the data. At the end of 2021, 78% of adults were either “doing okay” or “living comfortably,” according to the Federal Reserve’s Economic Well-Being of US Households in 2021. A full 64% of people could cover an unexpected $400 expense with cash or cash equivalent, up from 56% in 2020.
People have money and are spending it reassuringly murmurs more data, this time from the US Bureau of Economic Advisors (BEA). Personal income was up 0.4% in May, disposable income (what’s left after taxes) increased 0.3%, and personal consumption expenditures jumped by 0.9%.
Unemployment continues to fall even as there’s a near record number of jobs looking for candidates. White House National Economic Council director Brian Deese told Fox News that the country is experiencing “the strongest period of economic growth in 40 years, the strongest labor recovery in modern history, and progress on reducing the deficit.”
But consumers’ confidence slipped slightly in May as did their expectations of the short-term future for income, business, and labor conditions, by the Conference Board’s ongoing measurements. And the latest Forbes Advisor-Ipsos Consumer Confidence Biweekly Tracker shows that as Americans’ job security confidence and employment outlook were up, respondents’ expectations for their own financial futures slipped from two weeks before.
The atmosphere is almost like an early scene in a horror movie. Characters move about and everything seems fine on the surface, but there’s some sense of dread and slowly but inexorably perceptions move from sunny to cloudy and perhaps even to stormy.
The evidence that economic cheerleaders bring up is frequently one-sided, biased by a focus on averages, and data is inexact and flawed. The Fed’s Economic Well-Being report, for example, relies on surveys from October and November of 2021, while most families with children were getting refundable child credit checks and not long after folks had received their last Covid-19 relief stimulus checks. Bank accounts still had some of that anxiety reducing pandemic rescue cash, but it’s now quickly dwindling.
The BEA estimates of savings rates—percentage of disposable income that goes into personal savings—have drifted down from 6% in January 2022 to 5.9% in February, 5% in March, and just 4.4% in April’s. Banks have been seeing huge increases in credit card debt: seasonally adjusted annual rate up 10.2% in January and then 17.3% in February, 29.5% in March, and 31.6% in April, according to the Federal Reserve.