What a time to be in the United States—as long as you’re rich! Indeed, the topline number was undeniable—real gross domestic product (GDP) grew at a staggering annualized rate of 4.3% in Q3 of this year. That would be the fastest GDP growth the economy has seen in two years. Even with all of these positive economic signs, undercurrents are making some American consumers nervous.
Unemployment has increased to a four-year high of 4.6%, having gone from 4% in January. Unemployment is increasing, and wage growth for the middle- and lower-class has stagnated. As a consequence, millions of Americans are wondering if the new economic boom can endure. Unfortunately, as inflation continues to be a major concern, consumers are still feeling the crunch even as some prices seem to level off.
Economic Growth vs. Unemployment
That GDP growth has recently been celebrated as a tremendous success story. This 4.3% jump represents the continuation of a robust bounce-back from previous recessions. This is indicative of an economy that’s booming. Like most impressive national statistics, this one doesn’t mean much if you’re a typical American.
Mark Zandi, Chief Economist at Moody’s Analytics, emphasizes the disconnect between abstract economic measures and the reality faced by individuals. He states, “GDP is an abstract concept. People know jobs. They know they can’t find a job if they lose theirs.”
In addition to the worsening GDP figures, the unemployment rate hit a historic threshold in November, rising to 4.6%. This shift reflects a growing reality—it is becoming increasingly harder for Americans to find and hold down solid jobs. Check out this video. We promise to humanize our next generation AI REWRITE. The job market has shifted dramatically, with job seekers now outnumbering openings for the first time in four years.
Inflation Trends and Consumer Behavior
Further, inflation rates have varied widely, creating both disincentives and incentives for consumers to squeeze in a home purchase. As recently as November, inflation had reached 2.7%. That’s a decrease from the annual rate of 3% that it was when former President Trump first took office. Nevertheless, this figure remains higher than the average 1.7% inflation rate experienced by consumers over the decade prior to the pandemic.
Certain essential goods reflect this mixed picture. As of mid-September 2023, eggs have decreased in price by 13% over this time last year. In comparison, ground beef has gone through the roof, increasing by a whopping 15% just since May. Service price inflation, which covers things like car repair, went up 10%—the highest in 50 years—while coffee prices jumped a shocking 19%.
Gasoline prices are at a national average of $2.86 per gallon, the lowest we’ve experienced in four and a half years. As many know, other costs continue to blow up. Natural gas prices have gone up 9% and consumers are already paying an average of 7% more for electricity.
Disparities in Wage Growth
The new wage growth figures highlight huge inequities in how various income levels are doing during this tough economy. Yet over this same time period, middle-income households have only seen the growth of wages by 2.3%. In comparison, lower-income households actually experienced an increase half that size — only 1.4%. That paltry growth has been fertile ground for the question of who really profits from this shiny new boom.
Mike Reid, an economist, illustrates this disparity by noting that while some segments of society thrive, others lag behind significantly. “Retirees and the top 10% continue to drive the economy. It’s still very much a K-shaped economy.”
Add in widespread fears about future job availability, and you have a pretty daunting economic picture. A new survey tells us that positive expectations about job openings have sunk to record lows. It currently is at its four-year low, where it will remain for the next half-year.