Why does buying power seemingly not correlate with how people feel about the economy?

Question

I’ve been looking into economics recently as a way to understand wealth inequality, and I read something that just doesn’t make sense to me.

[https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852](https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852)

This source says that the 2018 nominal median income per capita was $33,706. It also says that in 1967, the national median income per capita was $2,464,but that would be equivalent to $18,261 in 2018 dollars. That’s roughly half of what our actual per capita income is.

From what I understand, the 1967 economy was doing fairly well, and throughout the 60s the economy was growing. So why is it that now, despite making twice what would expected if you just looked at inflation, people feel like the economy is really bad for the individual and that people aren’t earning enough money?

In: Economics

Answer 1

I’m by no means an economist or economic expert but I like to look at these kinds of things and ask similar questions. The biggest disparity I think lies in the fact that we’re here comparing an objective sentiment with a subjective sentiment. To say “Median income per capita now is X and back then it was Y, but if you assume some inflation rate then it’s equivalent to X/2” is an objective statement.

Feelings about the economy however are entirely circumstantial and can’t really be proven. With the rise of news and social medias, a lot of people are just adopting the feelings that “experts” propound on TV or in publications and articles. If I know I’m not an expert on finances and the economy and I hear some bigwigs in suits talking about the economy is in shambles, citing some numbers that sound compelling, I’ll just defer to their expertise and conclude it’s in shambles. On top of that, back in the day the truly luxury items were for the ultra wealthy and you didn’t see them as much because there weren’t a lot of avenues for sharing. Nowadays, there are some luxury items which have entered our everyday lifestyle like iPhones, not to mention the fact we now are targeted with ads and follow celebrities 24/7 to see what they wear and what they buy and all. All that adds to our sense of our current salaries and economic situation not feeling like it’s enough.

I hope that helps a little bit. Just my 2 cents. I could be wildly wrong lol!