4 Charts That Explain Why The Economy Is Growing But Doesn't Feel Like It

Economists are optimistic, but the public hasn't hated the economy this much in over a decade - these charts show why.

Jan. 27, 2026 at 5:55pm

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Despite the economy growing at a blistering 5.4% annualized rate in the fourth quarter, consumer sentiment has fallen to its lowest level since 2014. Economists point to a 'K-shaped' recovery where wealthier households have benefited from the stock market boom, while average households struggle with rising inflation eroding their buying power.

Why it matters

Understanding the disconnect between economic data and consumer sentiment is crucial, as forecasters have historically relied on consumer surveys to gauge consumption trends. The 'K-shaped' recovery highlights growing inequality, with top earners accounting for a larger share of wealth, income, and spending compared to a few decades ago.

The details

While the overall economy is growing, the gains are disproportionately benefiting higher-income households. Inflation has eroded the buying power of paychecks for those whose wages haven't kept up, hitting lower earners the hardest. Additionally, negative media coverage and partisan judgments in consumer sentiment polls are contributing factors to the public's downbeat view of the economy.

  • The economy is on track to grow at a 5.4% annualized rate in the fourth quarter of 2026.
  • Consumer sentiment fell to its lowest level since 2014 in January 2026.

The players

Bernard Yaros

Lead US Economist at Oxford Economics.

Adam Tooze

Economist and historian at Columbia University.

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What they’re saying

“Consumer sentiment has become unusually divorced from the macroeconomy since the pandemic. Understanding this disconnect is important because forecasters have historically looked to consumer surveys for additional useful information on consumption trends.”

— Bernard Yaros, Lead US Economist (Oxford Economics)

“Wealthier households own most of the stocks and have benefited most from the recent AI-driven stock market boom, while average households, more dependent on wages, see the financial situation deteriorating.”

— Adam Tooze, Economist and Historian (Columbia University)

What’s next

Economists will continue to monitor consumer sentiment and the uneven nature of the economic recovery to better understand the factors driving the disconnect between the data and public perception.

The takeaway

The 'K-shaped' recovery highlights the growing divide between the wealthy and average households, with the former benefiting from asset price appreciation while the latter struggle with rising costs of living. Policymakers will need to address these inequalities to ensure a more broad-based and inclusive economic recovery.