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Because economic indicators and personal experience measure different things. Slower inflation means prices are rising more slowly, not that earlier price increases have been undone. Meanwhile, household budgets, financial well-being, and views of the national economy can move in different directions. Recent U.S. survey findings show how people can report adapting to higher costs, feel uneasy about the economy, and still spend at resilient levels.
What “the economy is improving” can—and cannot—mean
There is no single number that captures the economy. Inflation measures how quickly prices change; output and labor-market statistics describe broad economic activity; household surveys ask how people say they are doing or what they think of the country’s prospects. These measures can improve or worsen at different times, and an aggregate trend does not describe every household.
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The evidence discussed here is U.S.-specific. In particular, the Federal Reserve’s May 2026 household report describes responses collected in 2025, not conditions in every country or a real-time measure of the economy.
Lower inflation does not mean lower prices
Inflation is the rate at which prices rise. If inflation slows, prices are generally still increasing, just more slowly; the price level falls only if prices actually decline. So a household can hear that inflation has eased and still pay more for groceries or other recurring expenses than it did a year or several years earlier.
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In the Federal Reserve’s 2025 survey, 58 percent of adults said prices paid compared with the prior year had made their financial situation worse. That was down from 60 percent in 2024 and 65 percent in 2023, but it still represents a majority reporting a negative effect. The figures are from the Fed’s report published in May 2026 and refer to survey years 2025, 2024, and 2023, respectively.
Personal finances and national sentiment are different questions
A person’s finances can be manageable even while they judge the country’s economy harshly—or the reverse. The Fed’s 2025 survey found 73 percent of adults said they were doing okay financially or living comfortably. At the same time, about one-fourth rated the national economy as good or excellent. That share was 3 percentage points lower than in 2024 and 24 points lower than in 2019. These results measure distinct judgments, so they are not contradictory.
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Survey indices also differ in what they emphasize. Brookings describes the University of Michigan sentiment measure as more focused on overall economic conditions and the Conference Board confidence measure as more focused on the labor market. Both include questions about respondents’ households and the broader economy, but they are not interchangeable. When comparing a headline, check which index it names and the period it covers.
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Households may be adjusting rather than feeling relief
In 2025, 35 percent of adults said their monthly spending had risen year over year, while 32 percent said their family’s monthly income had risen, according to the Fed’s income and expenses report. Those are self-reported changes, not a direct measure of whether each family’s income kept pace with its costs.
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The same report records practical responses to higher prices. Respondents could report more than one kind of adjustment:
- 62 percent switched to cheaper products.
- 60 percent used less of a product or stopped using it.
- 46 percent delayed a major purchase.
- 41 percent reduced savings.
These figures describe reported adaptations, not proof that every respondent made every adjustment. But they help explain why a slower rate of price growth may not feel like a return to normal: families may still be changing what they buy, postponing spending, or setting aside less money.
National averages hide uneven household experiences
Economic pressures are not shared evenly. The Federal Reserve’s 2025 report found meaningful declines in financial well-being among low-income, young, and Black adults. It also reports that the share saying prices worsened their finances varied by income and other characteristics. A national percentage is therefore a starting point, not a description of what any particular group—or individual—is experiencing.
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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →When reading an economic claim, look for the population behind it: all adults, workers, households in a particular income range, or another group. A favorable average can coexist with serious pressure for people whose income, expenses, or access to savings differ from the national norm.
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Why pessimism can coexist with resilient spending
Federal Reserve researchers linked survey responses with verified retail purchases through 2024. They found that inflation-adjusted everyday retail spending remained strong, including among some people who reported pessimism or lower income. Their analysis also associated worse reported sentiment with perceiving prices as rising faster than income and with having to make more spending adjustments.
Spending and confidence are not the same measure. A household may continue buying necessities while cutting back elsewhere, drawing down savings, or feeling less secure. Resilient purchases in the researchers’ data do not show that people were unaffected; they show that sentiment alone was a weaker guide to subsequent retail spending in that analysis. The findings are described in the Fed’s April 24, 2025 note, “Tracking consumer sentiment versus how consumers are doing based on verified retail purchases.”
Views of the country can reflect more than a household budget
People can use their own finances to judge the economy, but they also form views about conditions beyond their household. Brookings discusses political bias, negative news coverage, and social media as possible contributors to the gap between macroeconomic measures and household sentiment after the pandemic. These are possible explanations, not established as the sole cause or ranked by impact.
For a timely example, the Associated Press reported on September 29, 2026, that the Conference Board’s consumer confidence index had fallen in September, with respondents expressing concerns about prices. That is a dated survey reading reported by AP—not a government economic statistic or a permanent description of sentiment. It should be considered alongside, not substituted for, measures of prices, employment, output, and household finances.
How to read claims that “the numbers are strong”
- Identify the measure: Is the claim about inflation, the price level, employment, output, household income, financial well-being, confidence, or actual spending?
- Check the time period: A report published in 2026 may describe survey responses from 2025; an index reading may refer only to one month.
- Look at who was counted: National averages can obscure differences by income, age, race, and other characteristics.
- Separate feeling from behavior: A person can report pessimism and still make purchases, especially when those purchases are necessary.
Once these distinctions are clear, the apparent mismatch is easier to understand: some indicators can improve while prices remain high, budgets remain strained, and confidence in the national economy stays low.
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