You probably think the economy is much worse off than it is

• Inflation is cooling and jobs abound, but many Americans still feel dissatisfied with the economy.
• Democrats and Republicans alike think the economy is struggling, despite evidence showing otherwise.

Recent economic data is showing the US economy is doing quite well, but many Americans are not convinced.

Why would they be when lots of available jobs and increased gross domestic product haven't often translated to paychecks that can keep up with rent and grocery prices?

And when business leaders are crying recession.

Some say the US is in a "vibecession," a disconnect between how the economy performs and how Americans feel about its performance. Still-rising prices, a correction from the unusual economic conditions of the coronavirus pandemic, and public conversation about a still-looming threat of a recession may have overshadowed healthy economic data. Even now, with slower inflation, paused interest-rate hikes, and a healthy job market, Americans can't give up the idea that the economy is in trouble.

Public discourse about a looming recession and skepticism of progress

Americans' views of the economy, as tracked in a long-running survey by the University of Michigan, are around the lowest they've been since 1980. Despite a small jump since last summer, consumer sentiment has fallen since February, and these levels more or less match those of the Great Recession.

The sentiment crosses party lines. In a Pew Research survey conducted in late March and early April, a large majority of Republicans and Democrats alike still had a negative outlook on the economy. Democrats and Republicans surveyed by Pew have consistently rated the economy lower under President Joe Biden than they did during the Trump administration.

This could be caused by pessimism carried over from the start of the pandemic, negative news headlines, and some very real data showing more Americans are experiencing homelessness and attending food banks.

It could also be because of falling real wages, or pay when adjusted for the cost of inflation, compared with the past three years. According to the Bureau of Labor Statistics, real hourly compensation for all workers has fallen more since 2020 than at any time at least since World War II.

For that reason, people could just be feeling the stark difference from when they were flush with cash early in the pandemic. After household savings reached a record high in early 2020, real disposable personal income — what Americans can spend after inflation and taxes — is now back to pre-pandemic levels. If you're comparing your financial situation with that of three years ago, you're likely to feel as if the economy has gotten worse, even though it's actually gotten better.

"If unemployment falls but real wages do not rise, the public will not feel positively about the economy," Darren Grant, an associate professor of economics at Sam Houston State University, told Insider. "That's not vibes, it's common sense."

And finally, it could also be attributed to what Kyla Scanlon, who founded the financial-education company Bread, calls the "Black Mirror-ification" of the economy, in which people become skeptical of improvements. Despite unemployment at historic lows, a large majority of people still report hearing news about heightened unemployment, Scanlon pointed out.

The bank failures of this year have led some to believe a recession may be more likely. Jamie Dimon, the CEO of JPMorgan Chase, told CNN in April that financial turmoil was "recessionary" though wouldn't "necessarily force a recession." The New York Fed puts the likelihood of a recession by May 2024 at just under 71%, while The Conference Board, a business membership and research organization, estimated earlier this year a 99% chance.

Last month, Goldman Sachs lowered its prediction that a recession would occur to 25% after the debt-ceiling deal.

But there are still many signs pointing away from a recession at all in 2023, including the Fed's rate-hike pause and job growth. The US has the lowest inflation and highest GDP growth since the pandemic's start of the G7 countries, an informal bloc of industrialized nations.

While some economists may be cheering slowing inflation and a pause in interest-rate hikes, many Americans may have little interest, as prices are still up 15% since early 2021. With many Americans making similar to what they were pre-pandemic, a slight increase in food prices or a subtle drop in transportation costs may mean little if the prices of groceries and housing are still high.