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Economic Pulse

Why data on the economy doesn't match our feelings

David Brancaccio and Ariana Rosas Mar 10, 2025
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"[Net] wages haven't increased over the last 20 years" for middle-
and low-income Americans, said Gene Ludwig. "For 60% of America,
they've actually declined or been stagnant." Spencer Platt/Getty
Images
Economic Pulse

Why data on the economy doesn't match our feelings

David Brancaccio and Ariana Rosas Mar 10, 2025
Heard on:  
[GettyImage]
"[Net] wages haven't increased over the last 20 years" for middle-
and low-income Americans, said Gene Ludwig. "For 60% of America,
they've actually declined or been stagnant." Spencer Platt/Getty
Images
Listen Now

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  * Facebook
  * Twitter
  * LinkedIn
  * Email
  * [https://www.marketpl]
    COPY THE LINK

HTML EMBED:

[<iframe id="mp_16173]
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Hosted by Kai Ryssdal

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Leading up to the election, economic figures said the economy was
doing pretty well and inflation was slowing down significantly. Yet a
lot of people just didn't feel it.  

Now, inflation expectations are rising, polls show economists say
there's a higher risk of recession due to chaotic tariff policy, and
consumers have become even more pessimistic, according to survey
data. 

Gene Ludwig is chair of the Ludwig Institute for Shared Economic
Prosperity and former U.S. Comptroller of the Currency. He's also
author of "The Vanishing American Dream: A Frank Look at the Economic
Realities Facing Low- and Middle-Income Americans." He joined
"Marketplace Morning Report" host David Brancaccio to discuss what's
behind the disconnect between the economic data and how people
actually experience the economy. The following is an edited
transcript of their conversation.

David Brancaccio: People's lived experience tell us that the economy
needs work. Yet -- I mean, I end up reporting a lot of these -- the
headline economic numbers have been saying things are actually a-OK,
maybe we should stop whining. How do you resolve this great divide
over numbers versus what we see with our eyes?

Eugene Ludwig: We started looking at this back about, oh, five, six
years ago when we held a symposium to question why things felt bad
for middle- and low-income Americans. But at the time, the headline
statistics were looking pretty good, so I decided with the Institute
to begin to study the numbers and try to figure out why the folks at
that symposium, and in my own experience growing up in a small town
in Pennsylvania and seeing it deteriorate, why is this [there]
disconnect between what these headline numbers tell us every day and
what we're experiencing?

Brancaccio: Some of it is we do the monthly unemployment rate. It is
a crucial piece of data, but the headline one does not account for
people who are so discouraged by the job market that they've quit
looking; sometimes the payroll count that the Labor Department does
[does]. Yeah, look at all these people who got jobs this month, but
maybe they were working multiple jobs.

Ludwig: Well, all that is absolutely true, but sadly it's even worse
than that. What it doesn't account for is people who have a piece of
a job -- they work an hour or two here and there, but they want a
full-time job. It doesn't account for that. If they worked one hour
in the last two weeks, they're counted as being employed. That
doesn't in any way suggest whether the person can earn even above a
poverty wage. So unemployment -- as we'd like to say it: "functional
unemployment" -- it's really in the 20s, which is horrifying. And for
people of color, it's much worse.

Brancaccio: Many orders of magnitude higher than the headline figure
that they hand me every month when the unemployment rate comes up.

Ludwig: That's only one of the headline statistics that's misleading.
The inflation rate is also misleading. CPI is what it's called, the
consumer price index, [it] is a basket of 80,000 goods and services.
But for middle- and low-income Americans, they use a relatively
narrow group that matter to them most, which is food, housing,
education, transportation to work. And if you look at the basic
things that they can afford to buy, they have inflated over the last
20 years more rapidly than the CPI. So they're worse off. And that is
a big deal because it means that the net-net, their wages haven't
increased over the last 20 years. For 60% of America, they've
actually declined or been stagnant.

Brancaccio: I mean, I remember we used to spend a lot of time, when I
was a kid, focused on the Misery Index to gauge people's well-being.
But see, that was built on the faulty unemployment number that you
were talking about. It was, I think, unemployment rate + inflation =
misery. But we need something better, I guess.

Ludwig: We do indeed, and we'll be coming out with, over the next
couple of months, a Shared Economic Prosperity Index and a Minimum
Quality of Life measure that, together, will give the country a sense
of how people in the middle class are doing in reality.

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Also Included in

Economic Pulse
Tags in this Story

  * CPI
  * Data
  * Economic data
  * Economy
  * Functional unemployment
  * Poverty
  * Unemployment

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