US Public's Downbeat View Of Economy Is Real, Chicago Fed Research Shows  

• New research from the Chicago Federal Reserve highlights a significant disconnect between the performance of the U.S. economy and public attitudes, emerging in the spring of 2020 due to the onset of the COVID-19 pandemic.
• In the post-pandemic years, there has been a notable decrease in the average level of optimism regarding economic outcomes. Traditional correlations between indicators like consumer and small business sentiment, tied to measures such as unemployment rates and income, have weakened, impacting the economy and politics.
• The link between economic conditions and sentiment appears to have been severed after the pandemic recession. Potential reasons include the persistence of higher price levels, the normalisation of lower unemployment rates, and the impact of the pandemic's shock on public expectations about the economy.
• The American Psychological Association (APA) identifies a "collective trauma" affecting the nation, rooted in the COVID-19 pandemic, global conflicts, racism, racial injustice, inflation, and climate-related disasters. Survey responses reveal health, money, and the economy as significant stressors, with a notable increase in concerns about the economy since 2019, particularly among younger age groups.
• Despite recent improvements in sentiment, challenges persist. Younger demographics, critical for the economy and elections, express heightened economic concerns. Policymakers and politicians face the task of positively shifting the economic mood in the coming months, especially if inflation continues to fall alongside weaker wage and job growth.

(Source: Reuters)