Americans feel great about the economy, despite what they're saying

Americans are not happy with the way things are going in America.

Breaking news, right? We've long heard about how the rise of the Tea Party in 2010 and the subsequent rise of both Donald Trump and Bernie Sanders in the current presidential election are manifestations of this discontent.

But in a blog post on Thursday, former Federal Reserve chair Ben Bernanke notes that while satisfaction with the country at large is low, Americans are fairly bullish on their own economic prospects.

In other words, Americans appear to feel good about the economy, despite what they say about it.

This is the key chart from Bernanke:

And this poses an interesting puzzle for the future of the US economy: Will it be the short-term bullishness about personal circumstances that drive economic growth, or will long-term pessimism about the country win out? But this question might be altogether misguided, for as America's huge millennial generation enters their prime working and family building years, it seems likely more optimistic views about both personal and national situations will improve.

Bob Bryan wrote earlier this week, young Americans haven't loved the economy this much since the tech boom. And data from the Census Bureau that we highlighted earlier this week shows that demographic forces are becoming seriously positive for the US economy.

The US is witnessing, as the millennials and their younger siblings mature, a shift towards a younger, more optimistic consumer class.

So while broad pessimism about the country remains the prevailing narrative, things are not only poised to change with demographics but are already changing.

Broadly, Americans haven't been satisfied with the country's direction since the second Clinton administration. But as the economy has come back from the depths of the financial crisis, Americans' views on their personal finances have come roaring back, rising to levels last seen about 20 years ago.

Looking into generational and socioeconomic breakdowns of this data, Bernanke finds that young people are feeling as good as they have about the US economy since the turn of the century, while the bottom tercile of wage earners are about as bullish on their economic prospects as they were 15 years ago.

"In a highly polarized environment, with echo-chamber media, political debates often become shrill, and commentators and advocates have strong incentives to argue that the country's future is bleak unless their party gains control," Bernanke writes.

Adding:

In this environment, it seems plausible that people will respond more intensely and negatively to open-ended questions about the general state of the country, while questions in a survey focused narrowly on economic conditions elicit more moderate responses. Without doubt, the economic problems facing the country are real, and require serious and sustained responses. But while perceptions of economic stress are certainly roiling our national politics, it may also be that our roiled politics are worsening how we collectively perceive the economy.

I think in this Bernanke is arguing that we ought to focus on repairing the political divides that drive our pessimism in order to limit self-inflicted damage on the economy that grows out of a lack of confidence.

This view, however, is too fatalistic.

American consumers appear set to feel better about their present and their future no matter what people are saying right now.