Why do economic data do not match how we feel about the economy

Driving to elections, the economic figures said that the economy is doing quite well and inflation slows down. Still Many people simply didn’t feel it.

Now, Inflation expectations increaseSurveys show that economists say There is a higher risk of recession Due to Chaotic tariff policyand Consumers became even more pessimisticaccording to the survey data.

Gene Ludwig is the president of the Ludwig Institute for common economic prosperity and former American controller of the currency. Is also author of “The disappeared American dream: a sincere look at the economic realities that Americans face with low and medium incomes.” It was joined by the host “Marketplace Morning Report”, David Brancccio, to discuss what is behind the disconnection between economic data and how people actually experience the economy. The next is an edited transcript of their conversation.

David Brancacccio: The experienced experience of people tells us that the economy needs work. However – I mean, I get to report many of them- The main economic numbers They said that things are actually a-UK, maybe we should stop complaining. How to solve This great division over numbers to what we see with our eyes?

Eugene Ludwig: We started looking at this, Oh, five, six years ago, when we organized a symposium to ask why things felt bad for Americans with low and low incomes. But, at that time, the main statistics looked pretty good, so I decided with the Institute to start studying the numbers and try to discover why the people from that symposium and, in my experience, growing in a small city in Pennsylvania and seeing that we are deteriorating, why is this (there).

Brancaccio: Some of it is that we make the monthly unemployment rate. It is a crucial information, but the title does not take into account the people who are so discouraged by the labor market that they have given up the search; Sometimes salaries matter that the work department makes (do). Yes, look at all these people who got jobs this month, but maybe more jobs were working.

Ludwig: Well, everything that is absolutely true, but unfortunately it is even worse than that. Which does not take into account the people who have a work-work for an hour or two here and there, but they want a full-time job. It doesn’t take this into account. If they have worked an hour in the last two weeks, they are considered to be employed. This does not suggest in any way if the person can earn even over a salary of poverty. So unemployment – as we would like to say: “functional unemployment” – Is truly in the 20’swhich is awful. And for people of color, it is much worse.

Brancaccio: Many orders of size greater than the main figure that they hand each month when the unemployment rate will appear.

Ludwig: This is just one of the main statistics that are misleading. The inflation rate is also misleading. IPC is what is called, consumer price index, (it) is a basket of 80,000 goods and services. But for Americans with medium and low incomes, they use a relatively small group, which matters to them the most, which is food, housing, education, work. And if you look at the basic things they can afford to buy, they have swollen over the past 20 years faster than CPI. So they are worse. And this is a big deal, because it means that Net-Net, their salaries have not increased in the last 20 years. For 60% of America, they decreased or stagnated.

Brancaccio: I mean, I remember we used to spend a lot of time, when I was a child, focused on The index of misery To measure the welfare of people. But you see, this was built on the number of unemployment defect you are talking about. I think it was the unemployment rate + inflation = misery. But We need something betterI think.

Ludwig: Indeed, and we will go out, in the next two months, with a common economic prosperity index and a minimum quality measure of life that, together, will give the country a feeling of how people in the middle class do in reality.