Five reasons why Americans and economists can't agree on the economy

The Indicator from Planet Money

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Business

4.7 • 9.5K Ratings

🗓️ 8 January 2024

⏱️ 11 minutes

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Summary

One of the most puzzling developments for economists in recent months is the disconnect between positive traditional economic data and how people say they feel negatively about the economy. Add to that, people's behavior tracks with what economists would normally expect for happy times. So what's going on?

Today on the show, we turn to something economists have tracked for decades called the misery index. Right now, it says America shouldn't be so miserable, but as we've covered before, surveys say otherwise. We identify five reasons that explain the disconnect.

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Transcript

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0:00.0	NPR. This is the indicator from Planet Money, I'm Patty Hirsch.
0:14.4	And I'm Darien Woods.
0:15.8	And as every dedicated indicator listener knows,
0:19.4	there are many ways to measure the state of the economy
0:22.4	and the way people feel about it.
0:24.7	But today we want to introduce you to one that we haven't talked about before, which is the
0:28.7	misery index.
0:30.2	The misery index.
0:32.0	This is yet another aptly named economist Stab at trying to gauge high
0:36.2	unhappy Americans might be about the economy. Based on two numbers, inflation and unemployment.
0:42.1	Now both of these are comparatively low right now.
0:44.2	So the Misery Index says that we should be pretty happy about things.
0:48.0	Yeah, so the Misery Index has been around since the 1970s,
0:51.2	and for the most part it is tracked pretty well with sentiment but two-thirds of
0:56.2	Americans say the economy is not good right now according to a CBS news poll that
1:01.3	came out this week so the misery index is not tracking with our feelings today.
1:06.5	It does however appear to be tracking with our actions. You know, we say that we're as miserable as a
1:11.5	hairless cat caught in a rainstorm, but we don't appear to be behaving that way.
1:15.6	Our spending is up, so is our travel, our savings are down.
1:18.9	So are we miserable or not?
1:20.8	And this question is going to come up time and time again over the next few months as we run up to a presidential election.
1:26.0	So on today's show we have five reasons why this gap is showing up between the economist's numbers and our feelings.
	...

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