Stocks Soar, Wages Stall: Understanding America’s Economic Discontent

Since inflation began cooling in fall 2023, publicly available data shows that the economy has performed well by most standard measures. Yet despite these positive indicators, many Americans remain pessimistic about the economy. That skepticism is not without reason; while the topline numbers look strong, the economic data that affects average Americans has not looked so promising.

Economists who want to prove the economy is doing well will point to statistics like GDP, unemployment, and inflation to support their case. Since the first quarter of 2022, inflation-adjusted GDP in the United States has grown by around 2% to 3% per year, meaning the economy is growing at a rate consistent with historical averages. Since November 2023, inflation, as measured by the Personal Consumption Expenditures index, has remained below 3% year over year. Although still above the Federal Reserve’s target rate of 2%, it is close to the target and significantly better than in the years immediately following the COVID-19 pandemic.

Even unemployment, one of the most relevant indicators of Americans’ day-to-day economic experience, stands at 4.3%. This is historically on trend and not worryingly high.

Yet, post-COVID, Americans have been consistently concerned about the economy. In Economist/YouGov polling, 50% to 60% of respondents said the economy is getting worse, while only 10% to 25% said the economy is getting better, and a similar share said it is staying about the same. The only respites from this negative view came shortly after Biden was inaugurated and shortly after Trump was inaugurated, but both returned to negative sentiment before the end of their first year in office. In the latest Economist/YouGov poll from Oct. 10-13, 57% said the economy is getting worse, 21% said it is staying about the same, and 18% said it is getting better.

Before the pandemic, similar financial conditions existed, with low unemployment and modest inflation, yet economic skepticism was low. In a poll released Dec. 30, 2019, 39.3% said the economy was getting better, 29.7% said it was staying about the same, and only 23.5% said it was getting worse.

It’s clear that in trying to understand why Americans are skeptical about the economy, the general statistics about the health of the economy don’t suffice. The reality is reflected in less-cited statistics, such as median wage growth.

The U.S. Bureau of Labor Statistics measures inflation-adjusted weekly earnings. From the first quarter of 2015 to the first quarter of 2020, right before the pandemic, median wages rose by 7.6% over the five-year period. Over the five-year period from the first quarter of 2020 to the first quarter of 2025, wages increased by only 1.6%. This means that while employment is relatively healthy, wages for workers are increasing by only a fraction of what they were pre-COVID.

Over the same period from 2015 to 2020, rents increased by 20%, and from 2020 to 2025, by 27%. While median wages increased by only 1.6% from 2020 to 2025, average rent prices went up more than 16 times as much.

These measures provide a better understanding of why average Americans are so skeptical about the health of the economy. While the S&P 500 continues to hit record highs and has climbed more than 100% since January 2020, the vast majority, about 87%, of corporate equities and mutual funds, or investments in the stock market, are held by the top 10% of wealth holders in the United States.

The vast majority of Americans, then, do not see those gains and instead experience increases in costs such as rent, while income rises only slowly. To make more Americans hopeful about the economy, it will have to create an, not just the stock market.

A more optimistic outlook won’t be created just by a strong stock market. It will take an environment where wages and purchasing power for the median American rise over the next several years.