The latest report to highlight this confounding attitude, an inaugural consumer sentiment survey from KPMG, found that 54% of Americans were optimistic about their financial situation, while only 37% were hopeful about the country’s economy overall. KPMG’s study, which surveyed 1,100 people across the country, is the latest to find a significant divergence between Americans’ relative optimism about their own financial health and their pessimism over what many consider to be a teetering economy. That split between individuals’ confidence in themselves compared to the economy has been prevalent for a few years now, even if it does appear to be diminishing, at least according to KPMG’s data. 

The facts don’t always support the pessimistic narrative—unemployment is low, wages are growing, and the stock market remains on a tear. But prices for everything from household staples at the grocery store to big-ticket items like homes remain prohibitively high, which has frustrated consumers to no end. 

It’s just the latest head-scratching trend to come out of an unprecedented recession and recovery during the four years since COVID-19 hit the U.S. America’s economic reality since 2020 is best described as confounding: Inflation has come down, but without the usually expected rise in unemployment. Wages have risen, but not enough to assuage popular unhappiness over inflation. Consumers are worried about the economy, but don’t plan to cut their spending. 

Since the pandemic the economy has whipsawed from a near-total shutdown crash to a record-fast recovery and now likely a soft landing in the span of just a few years. Throughout that, workers and consumers have remained extraordinarily resilient, accumulating hefty pandemic savings and then spending through them at a rate that blew past most forecasts. 

Those myriad contradictory facts have left consumers confused and worried as they face an unprecedented economy. 

“The complexity that we’re dealing with today is just not really like the normal cycles,” said KPMG partner Matt Kramer. “Having been through several up and down economic cycles, this one’s a bit unusual.”

KPMG’s study isn’t the first to identify this paradox of the American consumer. A Federal Reserve study from May 2023 that measured responses for the calendar year 2022 found that the gap between what Americans thought of their own economic well-being compared to the country’s was even wider. That report found 73% of Americans felt “at least okay” about their finances, while a low 18% said the national economy was doing good or excellent. Admittedly, at the time the country was reeling from the record-high inflation of the summer of 2022 and the economy was only tentatively creeping out of its post-pandemic slump. And while consumers’ attitudes have softened a bit since then, judging by KPMG data, they’re still far from rosy. 

The Conference Board found this week that consumer confidence rose for the first time in three months, after falling steadily for most of the early part of the year. Much of the high level of confidence in the economy can be attributed to a job market that remains strong, according to Kramer. 

Unemployment currently sits at 3.9%, marking the longest streak of sub-4% unemployment since the 1960s. Real wages are also growing, per the latest Labor Department data, albeit only slightly, increasing 0.5% in April compared to the same month in 2023. 

“That’s giving [consumers] confidence in their ability to continue to find areas where they can spend,” Kramer said. They can “still enjoy the summer with their family and go on vacation, which is great for the U.S. economy.”

One particularly new development that’s boosted the job market, according to Kramer, is the prevalence of AI, which he says has opened up a talent gap that companies are eager to fill. “The digital wave is contributing as well,” he says. 

The debate over AI’s ultimate effect on the workplace is far from settled, with many—including some of the technology’s pioneers—saying it will inevitably lead to mass layoffs. But in the short term, at least, AI has created a hiring boom with many companies offering eye-popping salaries to experts. 

That’s not to say all the findings have painted a positive picture. A Gallup poll from last month found that respondents had declining confidence in both the overall economy and the job market. At the time Gallup fielded the study, news of layoffs in the tech industry was trending, which may have colored respondents’ view, the pollster noted. 

Consumers also have genuine concerns about the economy. Kramer believes middling confidence in the broader economy is driven by two interconnected factors that are far outside the control of any single person—intractable inflation and the high interest rates that won’t come down until inflation does. 

In recent months, stubbornly high prices have been a sore spot for virtually all households. True, inflation isn’t as high as it was in 2022, but it still remains above pre-pandemic levels. The Federal Reserve has been clear that it won’t lower interest rates until inflation is on track to reach its 2% target. So far that has not been the case. In fact, at least one Fed official floated the idea that the central bank would actually raise, not cut, rates this year, making for an even more uncertain macroeconomic environment.  

Kramer cautioned that there is no quick fix to either problem. 

“We’re in a marathon, not in a sprint, and it’s going to take some time,” he said.