Most Americans believe that the economy is getting worse, and economic confidence measures are low. At the same time, as analysts have pointed out, a lot of the economic data look pretty rosy. The unemployment rate is 4.6% and falling, and U.S. consumers have built up $2.3 trillion in extra savings over the course of the pandemic.

My Bloomberg Opinion colleague Justin Fox has helpfully explained this divergence of perspectives, but I would like to ask a slightly different question: Which view of the economy is “right” — the public’s or the data’s? On this issue, I side with the pessimistic voice of the people. Although I am optimistic about the U.S. economy in the long term, current conditions and near-term prospects are still subpar.

The best way to adjudicate competing claims about today’s economy is to consider opportunities for consumption. Over much of the last two years, labor supply contracted significantly, in large part due to the pandemic. That means the economy produced less. If you produce less, sooner or later you have to consume less, too. And if you consume less, you will be dissatisfied with economic conditions, especially in America, where the consumer typically is considered to be king (or queen).

There isn’t any way around this basic logic, no matter what the data say. Even if measured consumption is currently high, at some point it will have to fall relative to expectations. And indeed there are a host of problems, with shortages, supply-chain delays and a sluggish service sector. In a normal year, more Americans would have seen “Dune” on the big screen and gone to concerts. Americans are not quite able to get what they want, and that is obscured in the aggregate statistics.

The biggest messenger for consumption losses is the rate of consumer price inflation, which measured at 6.2% on last reading. Not so many Americans expect to get an offsetting raise of 5.4% in return, and above-average inflation is likely to continue for a year or two, some would say for longer. So real wages for many millions of Americans will be noticeably lower for the near future, too. That will translate into lower levels of consumption, with the timing of those losses depending on the spending and borrowing plans of individual households.

Add to all this growing and unprecedentedly high debt for the federal government, plus unfunded liabilities in Medicare and Social Security.

Even if they don’t understand the exact economic logic here, most Americans grasp the common-sense truth that inflation and deficits are bad — for them, for their real wages, and for their future opportunities. They are happy to have higher savings in the bank, but they see the treadmill turning ever faster.

Some parts of the labor shortage also qualify as a decline in consumption. One reason for the “great resignation” is that people cannot get the kinds of jobs they want. That too is a manner of enduring lower consumption, even though it does not show up in consumption statistics. It’s not just the unemployed, as many people took jobs they were only marginally happy with. A job might involve a higher risk of Covid exposure than a worker feels comfortable with, or an internship might take place in a largely empty office.

Another form of consumption-stinting simply has been the recognition of uncertainty moving forward. Most experts do not expect another immediate Covid development comparable to the delta wave. Still, we are now all acutely aware of these risks. That makes it harder to plan, for both businesses and households, which translates into fewer opportunities.

During the pandemic, the federal government has spent trillions of dollars in stimulus, to smooth incomes and limit the economic pain. Even if you disagree with many of the details of those policies, or think (as I do) that they were excessive, it’s hard to argue against the basic principle:  In directional terms, it was the proper response. In essence, the stimulus policies limited the decline in consumption during 2020 and 2021. Or rather, the stimulus shifted much of that decline to the future.

That future is now arriving. In the long run we are all dead, Keynes famously said. What he didn’t say, but I will, is that in the medium run our wages have not yet caught up with inflation. Both statements are accurate — but right now, it is the medium run that is more vivid in the eyes of most Americans.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “Big Business: A Love Letter to an American Anti-Hero.”

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