The Economic Sentiment and Data Divide

Resilient: A single word to capture the U.S. economy over the past five years. It’s remained on solid footing despite an unprecedented upheaval and equally dramatic recovery. But during this period of sometimes-puzzling economic strength, the people haven’t entirely been feeling it: Despite strong numbers on average, consumer sentiment is lackluster.

Economics is a complex, pervasive topic. When you begin to study it, you realize just how much you have to learn. I know that was the case for me, even before graduate school. So, for the general public, misinformation or misunderstandings could certainly prompt part of the gap between sentiment and reality. The easy answer is to assume ignorance. By implying the data is right and the people are wrong, you make it OK for economists, policymakers and journalists to cast aside these “flawed” perspectives.

Whether sentiment is shaping household and broader economic strength or being used by economists to predict spending and saving, how people perceive their economy matters.

This report examines the disconnect between economic data and sentiment, and potential reasons for it. It then discusses why we shouldn’t be too quick to discount how people feel about their economic prospects.