Why This Economy Feels So Wrong

Tracing the Roots of America’s Financial Fever Dream

Scan news headlines or talk to most economists, and you’ll hear choruses proclaiming America’s economy is thriving — unemployment is low, GDP is growing, and even inflation shows signs of cooling.

Yet scratch beneath the surface, you’ll find that 96% of everyday Americans seriously worried, living paycheck to paycheck, and increasingly relying on high-interest debt to stay afloat. This three-part blog post explores why so many feel left out of the “booming recovery” painted by statisticians and policymakers.

Credits: The rapid spike and decline of excess US household savings from early 2020 through 2022 — FRED

Pandemic Fueled a $2.6 Trillion Consumer Cash Glut Then Price Inferno

As COVID-19 ravaged populations and economies in early 2020, an unprecedented level of government stimulus payments (up to $3,200 per family) and boosted unemployment checks left lower-middle-income households financially better off.

By the end of 2020, US consumers had stockpiled an astounding $2.6 trillion in excess savings — a 70% jump over pre-pandemic balances.

Hunkering down at home also left consumer wallets bursting for those first reopenings in early 2021 after…