The numbers that lie (and those that lie a bit less)

For all the complex talk about “the economy,” it’s worth asking one simple question: What exactly are we talking about when we talk about the economy? Is it a specific and real thing, or just a story or collection of stories that we tell ourselves to make sense of our lives? And when the numbers — exact figures, broad averages, directional indicators — suggest one reality while millions of Americans are feeling something very different, whose story should we trust?

This week on my What Could Go Right? podcast, I asked Mark Zandi, chief economist at Moody’s and one of the country’s most respected economic forecasters, to help me unpack the growing disconnect between the economic data and our lived experiences. We explored why strong headline indicators can coexist with widespread pessimism, how inequality distorts our understanding of prosperity, and why global averages so often overshadow household finances.

Our conversation went well beyond inflation and interest rates, to debating the Federal Reserve’s role in shaping markets, whether political concerns about Fed independence are overstated, and why measuring the modern economy is increasingly difficult. We also asked what history can teach us about technological revolution, concluding that if AI follows in the footsteps of the personal computer and the Internet, disruption would be as inevitable as new opportunity. The most important challenge, we both agreed, is ensuring that the benefits of those opportunities are realized by more of us than a handful of innovators and investors.

As it has always been, any discussion of new economies comes down to how equipped society is to navigate profound change.

Here is a sampling from our wide-ranging conversation. You can listen to the podcast in its entirety here:

“The pandemic probably had some impact on the collective psyche. Sentiment surveys all have been depressed compared to pre-pandemic. So it feels like there’s something there.”

“We can solve problems if people can make money solving the problem.”

“A society that is affluent that fails to provide a sort of baseline security is gonna be perceived as a failure.”

“One of the ingredients of the American secret sauce is we adjust. Shocks occur, things happen. There’s financial pain. We adjust. We move to another part of the country, we take another job, we go back to school.”

“Individuals are so focused on possible risks that they miss possible upsides.”