US Economy Outlook: Are Concerns About the Economy Valid?

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Despite some big improvements, public sentiment about the economy is down.

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Key points

• The U.S. economy has improved tremendously since the start of the pandemic, as well as the start of 2021.
• Despite that, high living costs are prompting the majority of Americans to regard the economy as poor.

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The U.S. economy has improved tremendously since the start of 2021, and we're worlds away from where things stood back in the spring of 2020 when the pandemic first took hold. In spite of that, it seems like the public is less than thrilled with the state of the economy.

In a recent poll by The Associated Press-NORC Center for Public Affairs Research, 65% of Americans rated the economy as poor, and just 35% called it good. That's a decline from the 45% of Americans who thought the economy was in good shape in September. It's also in line with where public sentiment stood back in January and February before coronavirus vaccines were widely available and the public was grappling with a host of health and economic concerns.

Why the negative outlook on the U.S. economy?

A big reason why so many Americans have rated the economy as poor boils down to high inflation. These days, just about every common expense costs more to buy, from gas to groceries to clothing. Many Americans are struggling to make ends meet, especially in the absence of outside aid, such as a fourth stimulus check.

In September, the Consumer Price Index, which is a key inflation measure, rose 5.4% from the previous year. That wasn't exactly surprising, but it solidified the fact that it's gotten quite expensive to function.

What's also discouraging is that on top of so many Americans rating the current economy as poor, 47% say they expect things to get worse in the next year. Only 30% of Americans expect the economy to improve in the next year.

What should you do given the state of the economy?

On the one hand, the fact that unemployment is down on a national level should serve as a source of comfort for many Americans. But those who are struggling with increased living costs may be feeling the strain -- particularly people who live paycheck to paycheck without any money in a savings account to serve as a cushion.

If you're not happy with the fact that your expenses are costing more, try negotiating some of your larger bills. Your landlord may agree to give you a modest cut on your rent. Or, you can look at refinancing your mortgage to see if you qualify for a lower interest rate. If you do, you may be able to shrink your monthly housing payments.

Additionally, it pays to consider picking up a side job to boost your income while living costs are so expensive. Despite the public's negative outlook, there are quite a few jobs available, so it pays to explore different opportunities for scoring a higher paycheck overall. Often, changing jobs is the best way to get a pay increase.

It’s disheartening that so many Americans see the economy as in poor health. If anything, one reason things are costing more these days is the demand for them exceeds the available supply. Yes, there are ongoing supply chain issues, but that demand is also an indication that the economy is in decent shape, as it means people have the money to go out and spend. Still, it's hard to change public perception. Until inflation starts to wane, Americans may continue to feel the economy is generally in poor shape.

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