Despite a Partisan Divide, Americans Feel a Bit Better About Personal Finances
You would not know it from the gloom-ridden headlines of the financial media, but Americans are feeling a bit better about their personal finances than they were a year ago.
The share of adults who say they and their family are worse off than a year ago has dropped by eight percentage points, from 44 percent in September 2024 to 36 percent now, according to the latest polling from the Economist and YouGov. Most of that progress has been made by people moving into the ranks of those saying their finances are “about the same” as they were a year ago, which went from 40 percent to 46 percent. The share saying they are now better off rose by one point, from 14 percent to 15 percent.
Those are not exactly buoyant figures. But fewer people feeling as if they are falling behind is a significant brightening of the country’s mood.
Not surprisingly, there has been a lot of action below the top line. Republicans feel much better about the economy. The share of Republicans who say they are better off has jumped 17 points to 22 percent from five percent. The share saying things are about the same rose 21 points to 55 percent. The share saying they are worse off fell from 60 percent to just 21 percent.
Democrats have gone in the opposite direction. The share saying they are worse off jumped 22 points to 45 percent. The share of Democrats saying their financial situation is about the same fell from 49 percent to 43 percent. The share saying they are better off fell from 25 percent to 10 percent. Democrats are certainly feeling lousy.
It’s obvious that the perception of people about their personal finances—or, at least, what they tell pollsters about that perception—is heavily skewed by political partisanship. But we are actually less divided than we were a year ago. The Republican net sentiment—that is, the share saying they are better off less the share saying they are worse off—was at negative 55 a year ago, and the Democrat net sentiment was positive two, a gap of 57 points. Now, Republican net sentiment is at positive one, and Democrat sentiment is at negative 35, a gap of 37 points.
In other words, fewer Democrats feel they are worse off today than Republicans did a year ago.
Sentiment among independents has improved, although to a much lesser extent than among Republicans. The share saying they are better off rose from 12 percent to 14 percent. The share saying things are about the same rose from 34 percent to 40 percent. The share saying they are worse off fell from 51 percent to 42 percent. The net sentiment among independents remains negative, a -28 points, but much less so than a year ago, when it was -39 points.
Americans are also not very worried about job security. When asked by YouGov “How worried are you about losing your job?,” 61 percent said they are not very worried, down slightly from 63 percent a year ago. Just 11 percent say they are very worried, up from nine percent a year ago. The somewhat worried share hasn’t moved at all at 28 percent.
The Paradox of 2025: Fewer Jobs, Better Mood
That is a remarkable resiliency in confidence given the slowdown in hiring. In the three months leading up to September 2024, the economy was averaging around 82,000 jobs. At the time, it seemed even better, at least according to the official data that showed we were adding an average of 121,000 jobs over the three-month period from June through August. The most recent three-month average is just 29,000 jobs.
What explains this? Layoffs have remained low. According to the monthly Job Openings and Labor Turnover Survey (JOLTS), there were an average of 1.6 million layoffs each month in the second quarter of 2024. This year’s second quarter saw an average of 1.7 million. The unemployment rate has barely budged, rising from 4.1 percent a year ago to 4.3 percent in August (the latest month for which we have data). So, Americans who have jobs are not very worried about losing them because few Americans are losing their jobs.
The deceleration in job growth is driven mostly by supply rather than demand. Businesses are hiring fewer people because the labor force is growing more slowly. In the second quarter of last year, the civilian labor force was growing by an average of 352,000 each month. This year, that growth has slowed to 110,000. What this means, is that although job growth has slowed, the ratio of new entrants to new jobs has actually improved slightly. A year ago, average payroll growth was 23 percent of average labor force growth in the second quarter. This year it ticked up to 26 percent.
Given this, the resilience of household spending is not as much of a conundrum as many analysts think. The labor market is holding up well and actually doing a slightly better job of absorbing new workers. That gives households the confidence to keep spending, which is a large part of the reason the economy grew at 3.8 percent in the second quarter and appears to be growing robustly in the third quarter.
Americans are spending because fewer feel as if they are falling behind, and they remain confident that they’ll hold onto their jobs.
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