By all accounts, the U.S. economy is humming along quite nicely. Unemployment is low (especially among Americans in their prime working years), recession fears are abating, consumer spending is healthy, and wage increases are finally beating inflation.

Scroll on social media or talk to your friends, though, and the good news doesn’t seem to be translating. A recent CBS poll found 61% of respondents believe the economy is “struggling,” and, given the choice between good or bad, 65% describe the economy as the latter. Why is there such a disconnect?

The short of it: Facts and figures don’t always line up with how people perceive their lived experience. In the case of the U.S. economy, years of rising prices and recession fears have left some households afraid of what’s to come. The “vibecession,” as some commenters have called it, is alive and well.

“The economic news for the first half of 2023 was dominated with big tech layoffs, rising interest rates, and bank failures,” says Kelly Gilbert, fiduciary investment advisor at EFG Financial in Grand Rapids. “So, while we have jobs, Americans have always been waiting for the other shoe to drop.”

Inflation may be moderating, but it’s not reversing: Everything from food to housing still costs a lot more than it did a few years ago (and core inflation is still high). And while wages may be rising now, they weren’t keeping up with inflation for the past two years. In fact, real wages have barely risen from pre-pandemic levels, meaning families haven’t really gotten a raise in more than three years. There’s a lot of ground to make up, and that matters a lot more to people than a headline jobs number.

Take groceries. Food prices typically increase around 2% a year. But from 2021 to 2022, they increased a whopping 11%, after already increasing significantly in 2021. Food is the third largest expense in the typical family’s budget, according to the U.S. Bureau of Labor Statistics (after housing and transportation)—and while they might be able to trim some superfluous household spending, there’s not much that can be done to avoid eating.

Housing costs also play a big role. Those who weren’t able to buy in the low-rate heyday in 2020 now feel locked out for the foreseeable future. Not only can they not afford the prices, which soared over the past three years, but those who did buy aren’t willing to sell and lose their optimal interest rate. Renters have been left to pay significantly more for significantly less. And while homeowners are benefiting from their home’s soaring value, they can’t tap into it easily day to day.

The angst is especially common among Gen Z, says Christine Channels, head of client services and community banking at Bank of America. The younger generation is struggling to save and spend within their means, given the soaring costs of housing in particular.

“Though the economy is improving, the everyday consumer is not feeling the benefit to their wallet,” says Channels.

Thanks to the Fed’s interest rate campaign, those who have debt are paying a lot more interest on it. Savings rates may be going up in tandem, but the increase in borrowing costs is likely much more of a factor for consumers’ budgets (and, psychologically, plays into our negativity bias). Plus, tens of millions are about to have another multi-hundred-dollar bill added to their plate in a few months when federal student loan payments resume.

Even six-figure earners are feeling the pain. While these workers are at the top of the income spectrum, more and more report living paycheck to paycheck, highlighting inflation’s sting.

And then there was the drumbeat of recession predictions over the past year-plus. Though a recession hasn’t come to fruition (at least, not yet), you’d be forgiven for thinking the economy was tanking given headline after headline about an imminent collapse.

All that said, the vibes are starting to improve, according to the University of Michigan consumer sentiment index, which rose by 8.2 points to 72.6 in July, the highest since September 2021. With the stock market rallying and gas prices significantly lower than they were this time last year, sentiment may keep going up.

Still, families are paying more for essentials, saving less, and accruing record credit card debt—and consumer sentiment is still below pre-pandemic levels. The market’s rally, too, is less meaningful when investors have so far to go to recover their losses from 2022.

“Many of my clients are still cautious because they still feel the pain, but can’t point to why, and that scares them,” says Gilbert.