Americans are unhappy with the economy. It's no mystery why.

By Jeffry Bartash

Relentless inflation overwhelms good economic news

The U.S. economy appears to be in good condition, but relentless inflation has left Americans frustrated.

The stock market is at record highs. Unemployment is still extremely low at 4.4%. And incomes have been rising faster than prices for the past few years. So why do Americans say they are miserable?

It's no mystery, of course. The answer is relentless inflation.

Before the COVID-19 pandemic, inflation was barely visible. Prices rose around 1.5% a year. Americans hardly noticed the slowly rising prices.

Then came COVID and its aftermath.

The rate of inflation reached 9% based on the consumer-price index, and 7.2% according to the Federal Reserve's preferred PCE price index. The PCE is seen as a more accurate measure of inflation.

The rate of inflation has slowed sharply over the past few years, but prices are still rising 3% annually. That's well above the Fed's 2% goal.

But aren't earnings rising faster than inflation? They are, but not for everybody. And wage growth has slowed considerably this year.

Some people also have to cope with more inflation than others - renters, home buyers, used-car purchasers or parents with young children.

Beyond that, the cost of many staples Americans buy daily, weekly or monthly is rising faster than incomes. Inflation is quite visible to them.

The scourge of inflation largely explains why surveys of consumer confidence are in the dumps.

The consumer confidence index, for instance, fell in November to the second-lowest level since the 2020 pandemic. And the consumer-sentiment survey sank to its second-lowest level ever.

"It's no wonder Americans are gloomy right now as they see higher prices for many basic items and smaller pay increases," said Heather Long, chief economist at Navy Federal Credit Union.

Let's break down some income and inflation statistics to give a clearer picture of why there is so much unhappiness.

Start with hourly wages, one of the broadest measures of worker pay. From March 2020, when the pandemic erupted, to August 2025, hourly wages of all private-sector employees increased about 28%.

The rate of inflation, using the PCE index, rose a smaller but still painful 22% over the same five-year period.

Other measures of income show somewhat smaller inflation-adjusted increases from 2020 to 2025.

Averages are just averages, however. Each individual or family is different, and not everyone has enjoyed an increase in inflation-adjusted earnings since the pandemic.

Inflation, what's more, is now evident to everyone all the time.

Anyone shopping for groceries, going out to eat, filling up the gas tank, paying for car repairs, buying car insurance or checking utility bills is all too aware of how much more they are paying now vs. a few years ago.

Ed Yardeni, the renowned economic forecaster and founder of Yardeni Research, pointed out in a recent report that the cost of most "essentials" has risen faster than inflation since 2020.

MarketWatch's own deep dive into prices confirms the thesis (see the chart below).

The cost of most staples has risen faster than incomes, in some cases much faster. Think beef, coffee, eggs, car insurance, used cars and baby food, among other things.

The high cost of living is shaping up to be one of the biggest political issues in 2026, with Democrats already blaming the Trump administration's tariffs for an "affordability crisis."

The president, for his part, on Tuesday dismissed the Democratic attacks on affordability as a "con job." He's blamed most of the inflation on his predecessor, Joe Biden, who was in office when prices surged to a 40-year high in 2022.

-Jeffry Bartash

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12-03-25 1154ET