The U.S. economy continues to show signs of steady growth, with 162,000 jobs added in August and a persistently low unemployment rate. Despite these positive indicators, consumer sentiment remains notably pessimistic, highlighting a disconnect between broad economic measures and public perception.

Data from several surveys underscore this divide. The University of Michigan’s consumer sentiment index remains near historic lows, while recent Gallup polling found that 45% of respondents rate the economy as poor, with only 19% describing it as good or excellent. Similarly, a New York Federal Reserve survey and the Conference Board’s confidence index reveal subdued consumer outlooks. While the economy is not experiencing a boom, it also does not display significant weakness. Gross domestic product rose 2.1% over the past year, and inflation, although still a concern, has declined substantially from its peak of 9.1% in June 2022 to 3.4% as of July 2026.

Economists suggest that conventional economic indicators may not fully capture the financial pressure many Americans face. For instance, year-over-year inflation figures fail to reflect that consumer prices are approximately 28% higher than pre-pandemic levels. Moreover, inflation calculations exclude key costs such as home prices and interest rates, both of which have risen considerably in recent years. The average 30-year mortgage interest rate, for example, nearly doubled from 3.51% in early 2020 to 6.71% in recent weeks, significantly increasing housing expenses for many households.

Wage growth has also not kept pace uniformly across the workforce. Although average hourly earnings have increased by about 2.8% since before the pandemic after adjusting for inflation, a National Bureau of Economic Research working paper found that roughly one-third of workers experienced wage growth that fell short of inflation between 2020 and the end of 2025. For these individuals, purchasing power has eroded sharply, with some facing inflation-adjusted wage declines exceeding 3.5%, a loss that compounds over time.

The gap between economic data and consumer mood may also stem from how wage increases are perceived. Harvard economist Stefanie Stantcheva notes that many people view pay raises—particularly those earned through switching jobs—not as adjustments to keep up with inflation but as rewards for personal effort. This perception can intensify frustration when subsequent inflation erodes those gains.

Additional costs such as higher credit-card and auto loan interest rates further strain household budgets but are not reflected in standard inflation measures. Taking into account the rising costs of home purchases and borrowing, some economists estimate that consumer price increases since early 2020 would exceed 40%, a figure far higher than official inflation rates suggest.

Given these factors, experts believe the bleak consumer sentiment is rooted in tangible financial challenges that are not fully captured by headline economic statistics. While political and psychological influences may have some effect, the prevailing economic reality for many Americans remains difficult.