The S&P 500 keeps hitting new highs. Corporate earnings beat expectations. Unemployment remains historically low. So why do 68% of Americans think the economy isn't booming?
A new Reuters/Ipsos poll surveying 4,638 U.S. adults reveals the chasm between market performance and lived economic experience. While politicians tout a "golden age" of prosperity, roughly two-thirds of Americans aren't feeling it.
The numbers get more interesting when you break down the partisan divide. Even among Republicans, 43% disagreed the economy was booming—a notable crack in party-line economic optimism. Among Democrats, the rejection was near-universal.
But here's the data point that should terrify corporate boardrooms: 82% of respondents overall—including 72% of Republicans—rejected the idea that "there is hardly any inflation." Only 16% agreed with that statement.
Translation: Consumers know what they're paying for gas, groceries, and rent. No amount of Federal Reserve jawboning or White House press releases will convince them otherwise when their credit card bills tell a different story.
For businesses, this perception gap represents a fundamental demand problem. If the majority of consumers believe they're in a struggling economy, they'll behave accordingly—cutting discretionary spending, delaying major purchases, prioritizing savings over consumption.
The poll identified cost of living as the top factor determining midterm voting preferences. That's not a political story. That's a consumer sentiment story with massive implications for retail, automotive, housing, and hospitality sectors.
Particularly revealing: policy awareness remains spotty. 44% hadn't heard of proposals restricting investor purchases of single-family homes. 48% were unfamiliar with credit card interest rate cap proposals. But 78% knew about tariff increases, and 54% expected those tariffs would raise their living costs.
Consumers aren't stupid. They notice when prices go up. They're less aware of policy interventions that might help—which suggests either these policies aren't being effectively communicated, or consumers are skeptical they'll make a meaningful difference.
For Wall Street, this creates a dangerous disconnect. Equity markets price in perpetual growth and robust consumer demand. But if 68% of Americans think the economy stinks, where exactly is that demand supposed to come from?
The stock market and the economy are not the same thing—a lesson investors learn the hard way during every recession. When consumer sentiment is this negative despite objectively strong employment numbers, it signals something more fundamental is broken.
Companies that recognize this gap and adjust pricing, products, or positioning accordingly will outperform. Those that rely on rosy macro statistics while ignoring consumer psychology will miss earnings estimates and blame "unexpected softness in demand."
The economy people experience every day at the gas pump and grocery store will always trump the economy described in Fed speeches and CNBC segments. Right now, those two economies are living on different planets.
