Michelle Brosseau has seen the headlines boasting about the strong economy. She’s heard the experts talk about low unemployment, declining inflation and impressive gross domestic product growth.

But when she thinks about her own situation – often while making DoorDash deliveries between her full-time job and when she picks her son up from day care – it doesn’t match the economists’ rosy picture.

She was priced out of Portland and recently bought a house in Lewiston. The 6.75% interest rate wasn’t ideal, but she didn’t have a lot of options. Her son’s day care costs $800 a month, and he only goes part-time. Her salary has increased slightly, but it’s not nearly enough to offset the costs that keep mounting.

“I’m very much in the position where I have to juggle my bills,” said Brosseau, who works as an office administrator at a veterinary clinic. “I choose to pay some bills (now) and pay some later, which is not my favorite.”

By all the usual metrics, the U.S. economy is booming. Unemployment has come down from the double digits seen during the pandemic. Inflation has fallen to about 3.4% after hitting a 40-year high of 9% in 2022 – and it happened without any major job losses. Wages, on average, have increased by 4.5% in a year. Americans are spending money again – the GDP grew faster than any other advanced economy last year – and that’s expected to continue into 2024. The list goes on.

However many consumer sentiment surveys suggest people are miserable.

Until very recently, consumers reported feeling just as bad about the economy as they did during the low point of the Great Recession. That number is starting to climb, but attitudes are far from celebratory.

Economists are mystified.

Some point to politics as the driving force behind the discontent, while others argue that the metrics used to measure success don’t capture the intricacies of a 340 million-person economy.

“If we’re seeing a disconnect between what economists think and what the general public feels, it’s probably the public that’s right,” said Michael Cauvel, an assistant professor of economics at the University of Southern Maine. “They know what their checking account looks like.”

Economists touting only strengths “might need to look a little harder,” he said.

Inflation has slowed, but prices are still going up, and there’s a way to go before rates hit the Federal Reserve’s 2% target. Wages have increased for some, but it takes a substantial increase to combat the nearly 20% increase in the cost of consumer goods. Unemployment is low, but many job seekers can’t find a job that pays enough to keep up with the cost of living, while conversely, employers are struggling for enough bodies on the payroll to stay open. The cost of housing has ballooned – rents are more expensive, and the housing market is unobtainable for many.

For people like Brosseau working multiple jobs just to afford the basics, the disconnect is jarring.

“It’s kind of disheartening when you hear them say things are good and things are trending upward, yet I can’t pay my bills,” she said.

INFLATION

When inflation jumped to 9% in June 2022, consumer sentiment dropped to the lowest it’s been since the University of Michigan started measuring in 1978.

After about 30 years of low inflation, the sudden drop in purchasing power and rise in prices were a shock to the system. The “newness” had a big psychological impact, said Daniel Stone, a microeconomics professor at Bowdoin College.

“People got really used to it and felt really entitled to it,” he said.

Their sense of what a gallon of milk or a loaf of bread should cost and the price at the register did not line up.

Even as inflation has slowed, the prices seem high. As does the cost of nearly everything else. Many families faced with mounting grocery, gas and utility costs in recent years have been forced to cut back elsewhere or make up the difference.

James Watson is trying to rebuild his life, but it’s hard enough just to get by.

The 43-year-old Auburn resident recently started a construction and lead abatement business, but it’s been hard to get things off the ground. What little money he has after paying his bills goes directly into business expenses, but he hasn’t been able to recoup much of what he’s sunk into it.

He knows others who are struggling just as much, so he’s baffled by people who say this is a time of bounty.

“They say the economy is good, but the economy is good for the government. It’s good for people who already have money,” he said.

Watson tries to keep expenses low. He goes to work. When he’s home, he sits with his dog Queen and plays video games with the lights off. The TV provides enough light, he said, and it helps keep the electric bill down.

He goes to the grocery store and buys what he can, though his food stamps keep getting cut and it seems like it only takes a handful of items to rack up $100 at the cash register. He tries not to drive much because gas prices are so volatile.

“Every time you leave the house, you’re spending money,” he said.

Times are lean even for households not living paycheck to paycheck.

Ben Moore, who works in marketing for a restaurant delivery startup, said the company has been quieter than in years past as people reconsider their dining out budget.

At home in Portland, Moore and his wife shop around for the best deals on meat and buy in bulk, freezing what’s left. They meal plan carefully. Moore, 34, practices jiu-jitsu and is trying to move down a weight class to compete, which has helped cut down on the grocery budget. The couple has become strict about turning off all electronics at night.

On nights and weekends, Moore runs a photography and videography company and also helps build websites to earn additional income.

“We don’t necessarily live paycheck to paycheck. We’re like one notch above that,” he said.

People want to see prices decrease, but economists say that’s unlikely. As hard a pill as inflation is to swallow, deflation isn’t good either because it signals a recession.

“Nobody directly cares about inflation,” said Paul Shea, a macroeconomics professor at Bates College. “What they are really upset about is that their wages haven’t kept pace.”

Wages for some jobs have increased by more than 20% since 2019, but the median household income is about $4,000 below what it was before the pandemic, according to the U.S. Census Bureau.

Shea said the ripple effects of the inflation spike will likely take years to dissipate.

UNEMPLOYMENT

By all accounts, employment has more than rebounded since the pandemic. The national unemployment rate – currently 3.7% – has been below 4% for the longest stretch in more than 50 years. In Maine, it’s even stronger, at 3.2%.

But the unemployment rate has restrictive criteria – it doesn’t count people who want a job but have given up or aren’t actively working, and it doesn’t count the people who’ve left the workforce. It also doesn’t factor in wages or benefits.

The national labor participation rate is 62.5%. In Maine, which has the oldest population in the country, that is substantially lower at 59%.

The low unemployment rate and low labor participation rate have contributed to some people’s perception of a weakened economy.

Most Main Streets have more than a handful of help-wanted signs. Restaurants are reducing their operating hours. It seems like an increasing number of businesses report being short-staffed.

While the unemployment rate historically has been the primary driver of consumer sentiment, Stone said this shifted perception isn’t necessarily off-base.

“If that means that firms are not able to hire enough people to be open for business as much as they’d like to be, that’s a failure of the economy,” Stone said. “There’s a happy medium where (employers) are able to hire the people they need and (employees) don’t have too much power by there being too little labor.”

Despite all the reported job openings, some people are struggling to find something that pays well.

Watson hears the monthly reports of job growth, but he’s not buying it.

“Where? Warehouse jobs? That’s not helping anyone get ahead. That’s helping whoever owns that warehouse,” he said.

Even in professional industries, it’s hard to get a foot in the door.

When Ashley Bourassa was laid off from her longtime job as a title insurance sales rep, everyone assumed it would be easy enough for her to find something else. There were plenty of job openings.

But small, local companies couldn’t match the salary Bourassa was making at her corporate job and she needed to pay her bills. She wasn’t making inroads with national companies, either.

Bourassa, 36, estimates that she sent out close to 1,000 résumés in the nine months (and six days) she was unemployed. She felt like she was sending them into the abyss.

In the meantime, she collected unemployment. She had a severance package and had been able to save during the last few years of the real estate industry boom. She rented out one of the rooms in her Portland condo to a friend working as a travel nurse. When she needed to, she charged things to her credit card.

“Those last couple of months were challenging,” she said.

Eventually, through networking, she landed a job at the Maine office of a national title insurance company.

Bourassa wishes she could have taken a job at a Maine-based company, but the cost of living here is too high for her to manage on the salary the smaller businesses could afford.

“I was always hearing about jobs, there are jobs everywhere, but I don’t want to work five jobs in order to pay my bills,” she said. “I can’t take a one-third pay cut of my annual income.”

POLITICS

Some economists point to increased consumer spending as a sign that people are expressing more negative sentiment than they really feel, Stone said.

“Talk is cheap, and actions speak louder than words,” he said.

So why the bad reviews?

Cauvel said politics could play a role.

“If your party is in the White House, you tend to give a better assessment,” he said.

James Melcher, a political science professor at the University of Maine at Farmington, said there’s a clear partisan gap in how people look at the economy – perhaps more so than many other issues.

“It becomes so much of a team dynamic that they don’t want to say anything that will help the other team,” he said.

And while consumer sentiment may be nudging upward, voters have long memories – they tend to think about how much prices have increased throughout the administration’s term, even if inflation is leveling off.

While presidents get a lot of flak for rising gas prices, they don’t get credit for lowering them. The same goes for the price inflation of other goods.

“Those prices are still higher than what they think they should cost,” Melcher said. “Inflation slowing doesn’t comfort a lot of non-economists.”

Melcher said that could be a bad sign for President Biden, whose administration hasn’t been very successful in touting its economic gains. Positive news has often been overshadowed by headlines with more gripping visuals that bump the economy off the front page.

“The perception that the economy isn’t good is a big problem for (Biden) with voters in the middle,” he said.

HOUSING 

While some are quick to point to the political divide, others argue that partisanship plays a small role.

Shea, the Bates economics professor, said the redistributive nature of inflation is far more at fault for the “mixed vibes” surrounding the economy. And it’s most visible in the housing market.

Older, wealthier Americans who own their own home are likely locked into the low-interest rates from early in the pandemic, while the soaring housing market has given their home a nice boost in value, he said. They’ll still deal with the same sticker shock at the grocery store or gas pump, but the impact of inflated prices will generally be felt less acutely, he said. But the picture isn’t as rosy for everyone.

“If you’re in your 20s and you’re breaking into the labor market and you’re trying to buy a house, it’s very bad for you right now, regardless of your political persuasion,” he said. “The poorer you are, the younger you are, the more likely you are to be harmed by inflation.”

Recent studies have shown that renters are disproportionately affected by inflation. Prospective buyers – particularly first-time buyers – are also suffering, battling record-high home prices, historically low inventory and stubbornly high-interest rates.

The “fair market” rent in Portland has increased 40% since 2019, from $1,387 for a two-bedroom apartment to $1,946, according to the Department of Housing and Urban Development. That’s almost twice the national rate. Realtor.com reported that in November, the price of rent was up 22% compared with pre-pandemic levels.

At the same time, the average home price in Cumberland County has increased roughly 63% from $325,000 in 2019 to $531,000 in 2023, according to data from the Maine Association of Realtors.

The average mortgage rate for a 30-year fixed mortgage hit 7.79% at the end of October – a 20-year high. The number has since dipped back down to 6.69%, but it’s a far cry from 2.73% from January 2021.

High interest rates and high prices in many cases keep renters locked into the rental market.

Brosseau had lived in her Portland apartment for two years and was planning on a third when she was told the landlord would not be renewing the lease. She knew she wouldn’t be able to afford a two-bedroom apartment for the same rate she had been paying, so instead, she looked into home ownership and decided to give Lewiston a shot.

On a deadline, she put in an offer on the first house she looked at. A few months later, Brosseau, her 2-year-old son Levi and their cat, Mr. Slinks, are settled in their new home. Even with the high-interest rate, the mortgage is only about $200 more than she was paying for rent.

OPTIMISM

Despite what economists have been calling “bad vibes,” there are signs that people are starting to feel better about the economy.

Consumer sentiment has climbed 28% in the last two months. It’s the largest two-month increase that the University of Michigan has recorded since 1991.

Even those who have struggled in recent years are seeing the bright side.

Bourassa was able to find another job.

Moore and his wife moved out of the 400-square-foot apartment they had squeezed into with their dog, Tuna, and two cats, Cannoli and Xena. They feel lucky – their new apartment, 900 square feet in the West End, is a Portland steal for $1,600 a month. The rent for their previous place was increased to the same price when they moved out.

In Eastport, Shirley Richardson, a nurse, has had her wages increase by more than 20% in the last few years. She paid off her mortgage in August and the extra financial cushion has allowed her to consider purchases that previously seemed out of reach, like a van for her husband, who is disabled.

“I often try to remind myself about how lucky I am,” she said. “I get to do something that I really enjoy doing. I really like the people I work with. And … even with all these ups and downs of prices, we’re OK. We’re doing fine. So, I feel fortunate.”

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