Though similar and seemingly tangential to one another, the “economy” and the “cost of living” are two completely different metrics that are too often conflated. The Harris and Trump campaigns regularly refer to both either implicitly or explicitly, so it’s important for the public to understand the two in order to cast an informed vote in November.
The “economy” refers to the country’s broad economic success, while the “cost of living” pertains more directly to a household or an individual.
The latter involves measurements such as gross domestic product, the unemployment rate, and job growth. The former focuses on the cost of food, healthcare, housing, and other essential goods and services. Inflation- the measurement of the rise in prices over a particular time period- is central to both concepts.
There are many metrics regarding the current state of the economy that would suggest that it is quite strong. America has outpaced other countries with regards to its recovery from the pandemic, as measured by real GDP. The current administration flaunts high job growth and a low unemployment rate as proof that the economy is “good.”
The cost of living, however, tells a different story.
A CNN poll from July found that 39% of US adults “worry most or all of the time that their family’s income won’t be enough to meet expenses.” Credit card debt is at an all-time high and prices have risen around 20% since President Joe Biden took office. Housing unaffordability also hit an all-time high in early July.
Someone can make a decent argument that the economy is strong by referring to job growth (since the onset of the pandemic, mind you) or the unemployment rate. When you zoom in on a particular family or person, however, the outlook isn’t as rosy.
There’s a large disconnect between the way the public feels about the economy and the way the federal government discusses it. Much of this has to do with the various differences between the “economy” and the “cost of living.”
Understanding the two metrics and how they differ is essential to being an informed citizen- though the “economy” might be strong, in a sense, the cost of living is far too high for the average American.
With an imminent interest rate cut on the horizon, only time will tell how the economy and the cost of living look going forward.
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