For economists, the surge in public alarm over inflation is puzzling. By most measures, both the national economy and the personal economies of Americans are doing quite well. Gross domestic product rose last year at the fastest pace since 1984, recovering all of the output lost during the pandemic-induced recession in 2020.
Moreover, the unemployment rate has fallen to 4%, and it was down to 2.8% most recently for the Cincinnati area. Real estate and other asset prices, which matter for homeowners like the Staffords, remain well above year-ago levels.
Even so, inflation appears to have an outsize impression on consumers’ attitudes, in part because unlike most other economic data, higher prices tend to have a direct and often visceral impact on people’s everyday lives.
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