The Economy Looks Fine. Why Doesn’t It Feel Fine?

**Annie Lowrey** (0:00)
I really think of the past six, seven years as basically being an experiment telling us how much do people hate inflation, and they really hate it. And we had not had a big economy-wide test of this in a really long time. We weren't quite sure, right? It's a very different economy than the last time then we had this kind of like runaway prices. Plus, what's worse now is the price of housing, of child care, you know, they're nuts and people just despise it.

**Kara Swisher** (0:42)
Hi, everyone from New York Magazine and the Vox Media Podcast Network. This is On with Kara Swisher and I'm Kara Swisher. Today, we're talking about the state of the US economy. Inflation has remained stubbornly high, above the Federal Reserve's 2% target since March of 2021 Rising costs for basic necessities like housing, food and energy have led to what many Americans feel is an affordability crisis. The AI boom is feeling massive gains for a handful of tech companies, while nearly three quarters of Americans worry that AI will eliminate jobs in some industries, according to a recent Reuters Ipsos poll. Add to that the likely expansion of the Iran War and President Trump's renewed trade war, it's no surprise that American's economic outlook is somewhat pessimistic. I've gathered a panel of experts to break down some of the biggest issues facing our economy right now. Annie Lowrey is a staff writer at The Atlantic and the author of Give People Money. Catherine Rampell is an MS Now contributor and the economics editor for The Bulwark. Claudia Sahm is the chief economist at New Century Advisors and the founder of Sahm Consulting. She previously spent 12 years at the Federal Reserve Board, where she developed what is known as the Sahm Rule, a way to identify recessions in real time. I think it's really important to talk about the economy. Obviously, it's going to be the biggest deal in the election, and it's what people are worried about right now, given all the various forces at work at the economy, from the war to AI to just a feeling that something is off. So it's important to get some clarity here. Our expert question today comes from Mariana Matsukado, an economist, author, and professor at the University College in London, so stick around.
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Annie, Catherine, and Claudia, thanks for coming on On.

**Annie Lowrey** (3:24)
Thank you for having me.

**Catherine Rampell** (3:25)
Yeah, great to be here.

**Claudia Sahm** (3:25)
Yeah.

**Kara Swisher** (3:26)
Before we get to the data, let's start about how Americans are feeling about the economy now. A new Washington Post Ipsos poll found that people are generally pessimistic with one in five saying they think the economy will improve in the next year. That's not very good. What do you, each of you, just overall, what do you think the biggest factor driving economic pessimism is right now? Catherine, Annie, and then Claudia.

**Catherine Rampell** (3:46)
I think people have been soured on the economy for years at this point, and in some ways that makes sense and in some ways that do seem out of whack with the data, like prices have been elevated, wages have not been, depending on which measure you use, have not been keeping up, particularly since the Iran War started. But obviously, the elevated prices, elevated inflation predate that. We've been dealing with above-target inflation for over six years at this point. So there are a lot of things to be cranky about. That said, the degree of crankiness does seem a little bit outsized relative to the amount of crisis, if crisis is a quantifiable term in the economy. It's a combination of high inflation, kind of stagnant economy, and frankly, a lot of political disgust that sort of ends up as referred pain towards the economy.

**Annie Lowrey** (4:46)
I think Catherine is completely right. There's a lot to not like about this economy. Even relatively high income families that are making in the low six figures, families, which we don't generally worry about them a lot versus a family that's making $40,000 a year, are really squeezed by price pressures. That said, I think that basically the consumer sentiment and the economic sentiment numbers are no longer exactly reflecting just economic and consumer sentiment. I think that they have to do with our media and political environment.