You aren’t wrong about the decoupling, but it has more to do with the K-shaped economy we’re living in. The wealthy are driving the headline numbers and can absorb price shocks that absolutely crush everyone else. When the top arm of the K is soaring and the bottom is flatlined, GDP looks great while your neighbor has three GoFundMes.
There are also structural issues that disconnect most Americans from politics, except when it hits their wallet. As Carville famously put it during the Clinton campaign: “It’s the economy, stupid.”
And Trump? Egotistical, almost certainly narcissistic, and–more importantly–an economic idiot whose policies actively make this worse. ITEP’s analysis from last week shows that the net effect of his tax policies is a tax increase on every income group except the richest 5%. He might be able to navigate his companies through six bankruptcies and come out the other side richer, but translating that into policy that helps actual Americans? Not so much. Possibly because the narcissism makes it structurally impossible for him to prioritize anyone’s interests over his own.
Maybe, but median real earnings have beaten the cpi by ~2.5% since 2021, and the median should be resilient against any kind of K-shaped economy except one divided exactly at the 50th percentile. But the vibes don’t feel ~2.5% better than 2021, and people that I know who are far above the median are feeling the squeeze, so I’m hesitant to just write this off as “K-shape just does that.”
Fair point about the median, and you’re right that it should be resilient to top-heavy skew. But I think that 2.5% number is doing more heavy lifting than it deserves.
For starters, that’s cumulative over roughly five years. So we’re talking about 0.5% per year in real terms. (i.e. $250 for 50k) Statista’s own headline on that data is “U.S. Wages Have Barely Kept Up With Inflation.” For median wage that’s maybe two nice dinners out a year. It’s not keeping up with rent. It’s not keeping up with insurance. It’s definitely not a vacation.
And that gets to the bigger problem with CPI as the yardstick. CPI has been a point of contention for years, especially as it’s been politically massaged to understate what people actually experience at the register. The things you cannot skip buying (housing, healthcare, food, insurance) have outpaced headline CPI by a mile. Deloitte’s March 2026 consumer pulse found that discretionary spending intent dropped below the 2021 baseline. People who are genuinely better off don’t cut discretionary spending. People whose essentials ate the raise do.
But the real K isn’t even in income. It’s in wealth. The Minneapolis Fed, U.S. Bank, and TD Economics all published analyses this year confirming the divergence is sharpest in asset appreciation and net worth, not wages. Your paycheck can be up 0.5% a year and that’s technically “beating CPI,” but if you don’t own a home or a stock portfolio you missed the actual wealth escalator entirely. The top 10% holds something like two thirds of all equities. That’s where the K really bites.
And here’s the part that matches what you’re seeing anecdotally about people above the median feeling squeezed. Michigan’s April sentiment data shows an 11% drop across all income brackets, all age groups, all political affiliations. This isn’t a bottom-of-the-ladder problem anymore. Credit card APRs went from around 16% to 22% in the same period wages “beat” CPI by half a percent a year. The raise went to Visa, not to vibes.
So I’m not saying the median number is wrong. I’m saying it’s measuring the wrong thing.
It’s like checking your speedometer while two of your tires are flat.
Beating CPI nominally means it’s keeping up with rent, insurance, vacations, so I think your first paragraph is a little misguided (though the analysis does seem strong on the whole, please don’t read this as me being dismissive). I find the Statista headline somewhat deceptive – barely keeping up with inflation is another way to say that real wages are rising, which should be reflected as an improvement to people’s lived experience, even though that really doesn’t seem to be the case. And similarly, the idea of the CPI is that when insurance, rent etc are increasing faster than the CPI, it’s because we’re seeing compensatory gains in affordability in other parts of the market basket – groceries, medical care, what have you. I do find your argument that the CPI is measuring the wrong thing to be very persuasive, since it’s about the only thing that makes any sense to me – how else would we see sentiment tanking while economic indicators are rising? I’m just not sure what is being left out, though the idea that interest on credit cards isn’t included in the CPI and has significantly increased does sound very plausible.
Edit: I actually left out the part where we agree the hardest, which is dumb. I’m with you 1000% on the wealth gap being K-shaped and affecting consumer sentiment. I think there’s a real possibility that at a certain level of inequality, it doesn’t matter to Joe and Jane Consumer if they are richer than last year or not because Elon Musk is rich enough to cause Kessler Syndrome and no-one can stop him.
Another consideration is the hollowing out of government statisticians and availability of data. Even the massaged nonsense we’ve been fed for years is getting curtailed. Thr economy will be what they say it is. They have optimized to the metrics to make line go up. Reality need not matter to those whose entire wealth is in the markets.
The more that we’re talking through this, the more seriously I’m considering the possibility that the reason BLS data is so divergent from what everyone is saying is because Trump’s DoL is cooking the books.
Truefully, they’ve been cooking the books on these measures since 08. Its just so much more obvious since they have the subtlety of a hammer and all the civil servants who would have helped them do it the normal way left.
You aren’t wrong about the decoupling, but it has more to do with the K-shaped economy we’re living in. The wealthy are driving the headline numbers and can absorb price shocks that absolutely crush everyone else. When the top arm of the K is soaring and the bottom is flatlined, GDP looks great while your neighbor has three GoFundMes.
There are also structural issues that disconnect most Americans from politics, except when it hits their wallet. As Carville famously put it during the Clinton campaign: “It’s the economy, stupid.”
And Trump? Egotistical, almost certainly narcissistic, and–more importantly–an economic idiot whose policies actively make this worse. ITEP’s analysis from last week shows that the net effect of his tax policies is a tax increase on every income group except the richest 5%. He might be able to navigate his companies through six bankruptcies and come out the other side richer, but translating that into policy that helps actual Americans? Not so much. Possibly because the narcissism makes it structurally impossible for him to prioritize anyone’s interests over his own.
Maybe, but median real earnings have beaten the cpi by ~2.5% since 2021, and the median should be resilient against any kind of K-shaped economy except one divided exactly at the 50th percentile. But the vibes don’t feel ~2.5% better than 2021, and people that I know who are far above the median are feeling the squeeze, so I’m hesitant to just write this off as “K-shape just does that.”
Fair point about the median, and you’re right that it should be resilient to top-heavy skew. But I think that 2.5% number is doing more heavy lifting than it deserves.
For starters, that’s cumulative over roughly five years. So we’re talking about 0.5% per year in real terms. (i.e. $250 for 50k) Statista’s own headline on that data is “U.S. Wages Have Barely Kept Up With Inflation.” For median wage that’s maybe two nice dinners out a year. It’s not keeping up with rent. It’s not keeping up with insurance. It’s definitely not a vacation.
And that gets to the bigger problem with CPI as the yardstick. CPI has been a point of contention for years, especially as it’s been politically massaged to understate what people actually experience at the register. The things you cannot skip buying (housing, healthcare, food, insurance) have outpaced headline CPI by a mile. Deloitte’s March 2026 consumer pulse found that discretionary spending intent dropped below the 2021 baseline. People who are genuinely better off don’t cut discretionary spending. People whose essentials ate the raise do.
But the real K isn’t even in income. It’s in wealth. The Minneapolis Fed, U.S. Bank, and TD Economics all published analyses this year confirming the divergence is sharpest in asset appreciation and net worth, not wages. Your paycheck can be up 0.5% a year and that’s technically “beating CPI,” but if you don’t own a home or a stock portfolio you missed the actual wealth escalator entirely. The top 10% holds something like two thirds of all equities. That’s where the K really bites.
And here’s the part that matches what you’re seeing anecdotally about people above the median feeling squeezed. Michigan’s April sentiment data shows an 11% drop across all income brackets, all age groups, all political affiliations. This isn’t a bottom-of-the-ladder problem anymore. Credit card APRs went from around 16% to 22% in the same period wages “beat” CPI by half a percent a year. The raise went to Visa, not to vibes.
So I’m not saying the median number is wrong. I’m saying it’s measuring the wrong thing.
It’s like checking your speedometer while two of your tires are flat.
Make sense?
Beating CPI nominally means it’s keeping up with rent, insurance, vacations, so I think your first paragraph is a little misguided (though the analysis does seem strong on the whole, please don’t read this as me being dismissive). I find the Statista headline somewhat deceptive – barely keeping up with inflation is another way to say that real wages are rising, which should be reflected as an improvement to people’s lived experience, even though that really doesn’t seem to be the case. And similarly, the idea of the CPI is that when insurance, rent etc are increasing faster than the CPI, it’s because we’re seeing compensatory gains in affordability in other parts of the market basket – groceries, medical care, what have you. I do find your argument that the CPI is measuring the wrong thing to be very persuasive, since it’s about the only thing that makes any sense to me – how else would we see sentiment tanking while economic indicators are rising? I’m just not sure what is being left out, though the idea that interest on credit cards isn’t included in the CPI and has significantly increased does sound very plausible.
Edit: I actually left out the part where we agree the hardest, which is dumb. I’m with you 1000% on the wealth gap being K-shaped and affecting consumer sentiment. I think there’s a real possibility that at a certain level of inequality, it doesn’t matter to Joe and Jane Consumer if they are richer than last year or not because Elon Musk is rich enough to cause Kessler Syndrome and no-one can stop him.
Another consideration is the hollowing out of government statisticians and availability of data. Even the massaged nonsense we’ve been fed for years is getting curtailed. Thr economy will be what they say it is. They have optimized to the metrics to make line go up. Reality need not matter to those whose entire wealth is in the markets.
The more that we’re talking through this, the more seriously I’m considering the possibility that the reason BLS data is so divergent from what everyone is saying is because Trump’s DoL is cooking the books.
Truefully, they’ve been cooking the books on these measures since 08. Its just so much more obvious since they have the subtlety of a hammer and all the civil servants who would have helped them do it the normal way left.