Executive Summary:
On paper, the American consumer looks flush: Unemployment is low, inflation is down, the stock market is up, and average wage growth has kept up with inflation. Indeed, the Misery Index is low, which usually means consumer sentiment readings are high. But, no, sentiment is low. What gives? … Several factors may contribute to Americans’ feeling that life has become less affordable than before the pandemic. The prices of nine PCED components—essentials for many—have inflated way faster than wages. And many Americans’ wage growth is below the average and lags inflation. So why is consumer spending holding up so well? … Also: Dr Ed reviews “The Life of Chuck” (+ + +). …. Check out the accompanying chart collection.
Affordability I: A Depressed State of Mind
Why are consumers so depressed? The monthly Consumer Optimism Index (COI), which is the average of the Consumer Sentiment Index (CSI) and the Consumer Confidence Index (CCI), fell to
