On perspective – Paul Krugman in NYT:

‘Yet consumers appear to be feeling very downbeat — or at least that’s what they tell surveys like the famous Michigan Survey of Consumers. And this perception of a bad economy is clearly weighing on President Biden’s approval rating. Which raises the question: Are consumers right? Is this a bad economy despite data showing it as very good? And if it really isn’t a bad economy, why does the public say it is?’

(…)

‘So what is going on? Let’s start with the obvious culprit, inflation, which is indeed running hotter than it has for decades.
Rising prices have certainly eroded many workers’ wage gains, although real personal income per capita is still above its prepandemic level even though the government is no longer handing out lots of money. And my sense is that inflation has a corrosive effect on confidence even when incomes are keeping up, because it creates the perception that things are out of control.’

(…)

‘Another clue is that you get very different answers when you ask people “How are you doing?” rather than “How is the economy doing?” The Langer Consumer Confidence Index asks people separately about the national economy — where their assessment is dismal — and about their personal financial situation, where their rating is high by historical standards. The Michigan Surveys don’t ask quite the same questions, but they do ask people how their current financial situation compares with five years earlier; 63 percent say they’re better off, the same number as in September 1984, just before Ronald Reagan won an electoral landslide with claims that it was “morning in America.”’

Read the article here.

In the Netherlands we could see a similar phenomenon. ‘I’m doing fine, but the country is going down.’

Krugman suggests that media and partisanship are causing the gap. (I’m well, the economy is shitty). Interestingly enough Krugman doesn’t mention Covid, other than that income is above its prepandemic level.

Perception matters. It’s how elections are being won or lost, it influences the economy, and people make important choices based on perception, for example with whom they want to have a child.

And there is the old bias that optimism is shallow and naïve.
So, you keep on shopping, while believing that everything is getting worse, in order to spend money and feel intelligent at the same time.