The President And The Public Give The US Economy Different Grades

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So why all the public pessimism? In a big, complex economy like ours, booms don't benefit everyone; if you're struggling, you don't regard the economy as great even if government statistics do. Within the ag economy, some farmers can enjoy windfalls at the same time others are going broke.

Jobs are a big part of the problem. When GDP is this strong, they're usually plentiful. That's not the case today. New job creation has stalled.

The unemployment rate has only risen a few tenths of a percentage point over the last year and is still relatively low at 4.6%. But with the never-ending talk of AI replacing humans, even high-performing employees worry about losing their jobs.

Word is out that people who've lost jobs are having trouble finding new ones.

In the Federal Reserve Bank of New York's December survey, expectations of finding a job if a current job were lost fell 4.2 percentage points to 43.1%, a new low.

The market for precious metals delivered another vote against economic optimism last year. The price of gold, the classic safe-haven metal, rose 64%. This wasn't about“physical demand” – investment funds and central banks were among the big buyers. Apparently, they see inflation on the horizon.

Current inflation is another big reason for the public's unhappiness with the economy. The inflation rate has continued to hover uncomfortably around 3%, nearly a percentage point higher than the Federal Reserve's 2% target. Respondents to the New York Fed survey were expecting a 3.4% inflation rate a year from now.

What's upsetting many Americans, though, is more the level of prices than the rate of increase.

Supply-chain disruptions during the pandemic made prices soar 8% in 2022 to unusually high levels. They've remained high; Americans want them to come down. Trump promised during the 2024 campaign to bring them down on his first day as president. He hasn't been able to do that in his first year.

Yes, gasoline prices have fallen. But electricity prices have risen as have the prices of many other goods and services.

Moreover, houses are unaffordable for many Americans. Mortgage interest rates have come down but the 30-year mortgage rate is still too high for many at around 6.2%.

Trump's tariffs haven't helped. They've driven prices higher, though not yet as much higher as many had feared. His attacks on the Federal Reserve's independence could yet rouse bond investors to drive long-term interest rates higher even if the Fed continues lowering short-term rates. That would be bad news for mortgage seekers.