Understanding the Bipartisan Discontent with the US Economy

Despite positive economic indicators such as low unemployment and decreasing inflation, a majority of Americans express dissatisfaction with the economy. This discontent can be attributed to the decline in real wages, which have significantly decreased in recent years. Claims of rising wages are misleading as they are based on average hourly earnings, which have been skewed by workforce-composition changes during the pandemic. The return of low-paying service jobs has dragged down average hourly earnings growth. Adjusting for the changing composition of the workforce, the National Compensation Survey's Employment Cost Index reveals that inflation-adjusted wages have shrunk by 3.7 percent since the end of 2020, erasing all gains made in the late 2010s. Additionally, rising Treasury yields and interest rates have made it difficult for many Americans to achieve traditional milestones such as homeownership and car ownership. Without a significant boost in productivity or a decrease in energy prices, real wages are likely to continue to stagnate, leaving Americans dissatisfied with the economy.