When economic headlines tout strong job growth and booming markets, the news is generally welcomed as a sign of national health. For a worker struggling to pay the rent or buy groceries, however, believing that the broader economy is thriving may carry a hidden psychological cost.
According to a study published in Social Psychology Quarterly, personal beliefs about the national economy alter how financial stress relates to a person’s sense of control over their life. Researchers found that among people experiencing financial hardship, those who believe the economy is doing well report a stronger sense of powerlessness than those who think the economy is doing poorly or just getting by.
The puzzle of economic perceptions
In recent years, economists and media commentators have puzzled over a persistent gap between solid macroeconomic indicators and gloomy public sentiment, a phenomenon popularly dubbed a “vibecession.” Even when inflation cools or unemployment stays low, large segments of the public continue to rate national economic conditions unfavorably.
This disconnect caught the attention of sociologists Jiarui (Bruce) Liang of Yale University and Alexander Wilson and Scott Schieman of the University of Toronto. The cross-border research team wanted to know whether these subjective perceptions of the broader economy shape the psychological toll of personal money troubles.
Sociologists have long established that financial strain, defined as the ongoing difficulty in paying bills and affording basic necessities like food, housing, clothing, and medical care, is closely linked to feelings of powerlessness. In sociology, powerlessness refers to the belief that you lack personal control over the events and outcomes in your everyday life, leaving you feeling unable to solve your own problems.
Previous studies have examined how objective economic conditions, such as local unemployment rates, influence the mental health of people facing job insecurity or financial stress. Those investigations produced conflicting results, and very few studies directly measured how individuals personally perceive the state of the national economy.
Does a good economy offer hope or sting worse?
To address this gap, Liang, Wilson, and Schieman laid out two competing sets of possibilities for how economic perceptions might shape the experience of personal money woes. Because perceptions can cut both ways, the researchers compared people who view the economy as “poor” or “good” against a middle baseline of people who view the economy as “only fair.”
Under the first line of thinking, believing the economy is poor could worsen the psychological weight of financial strain. If a cash-strapped worker thinks the national economy is in bad shape, opportunities to find a better-paying job or improve their finances may seem scarce, making their struggles feel inescapable.
By the same logic, viewing the economy as good might act as a psychological buffer for someone having a hard time paying the bills. A thriving economy could signal that opportunities are abundant and offer reassurance that their financial predicament is only temporary.
The second set of hypotheses predicted the exact opposite outcome. Drawing on social comparison theory, which notes that people evaluate their own situations by looking at others around them, the researchers considered whether perceiving a poor economy might actually protect struggling workers. If you cannot make ends meet, believing the whole economy is struggling might signal that millions of other people are in the same boat, reducing the stigma of your hardship.
Conversely, struggling to afford necessities while believing the national economy is booming could intensify feelings of powerlessness. When people think everyone else is prospering while they fall behind, they may experience what sociologists call relative deprivation, the feeling of being unjustly denied the security that comparable peers enjoy. Seeing others get ahead while your own efforts fall short can foster the belief that life’s outcomes are dictated by external forces beyond your control.
A booming economy can also trigger self-blame, especially in Western societies that strongly embrace the idea of meritocracy. When a culture teaches that success is strictly the reward for hard work and talent, struggling financially during good economic times can lead people to conclude that their failure is entirely their own fault. In psychology, blaming oneself for an unyielding problem tends to foster learned helplessness, a state that closely mirrors a generalized sense of powerlessness.
The researchers also wanted to test whether these patterns differed between the United States and Canada. Past sociological writing has suggested that while the two neighbors share many values, Canadians place slightly more emphasis on equality of outcomes and hold less rigidly to meritocratic ideals than Americans do. If that cultural difference holds true, perceiving a good economy while broke might not sting quite as badly in Canada as it does in the United States.
Surveying workers across North America
To test their four hypotheses, the researchers analyzed data from two nationally representative online surveys conducted in the fall of 2023. The American sample included 2,466 workers surveyed through YouGov in November 2023, while the Canadian sample included 2,501 workers surveyed through the Angus Reid Group in September 2023.
Both surveys asked identical questions to measure the core concepts. To gauge financial strain, participants reported how often in the past year they had trouble paying bills, how often they lacked money for food, clothes, or other household needs, and whether they usually had money left over or came up short at the end of the month.
To measure powerlessness, respondents rated their agreement with four statements: whether they feel they have little control over things that happen to them, whether they see no way to solve some of their problems, whether they often feel helpless in dealing with life’s problems, and whether they sometimes feel pushed around in life. Participants also rated current national economic conditions as poor, only fair, good, or excellent, with the researchers combining the good and excellent responses because very few people rated the economy as excellent.
In their analysis, the authors accounted for a wide range of personal characteristics to isolate the role of economic perceptions. These included age, household income, whether the respondent held a bachelor’s degree or worked in a professional occupation, race, gender, cohabitation status, and political party affiliation or voting history.
In both countries, roughly 22 percent of American workers and 15 percent of Canadian workers rated the national economy as good or excellent, while the rest viewed it as fair or poor. Across the board, higher levels of financial strain were consistently linked to higher levels of powerlessness.
When the researchers looked at how economic perceptions shaped that link, they found clear support for the meritocratic attribution hypothesis in both nations. Among workers experiencing high financial strain, those who perceived the economy as good reported noticeably greater feelings of powerlessness than those who viewed the economy as fair or poor.
For workers who were not experiencing any financial strain, the pattern flipped. Financially comfortable respondents who viewed the economy as good reported feeling less powerless than financially comfortable respondents who viewed the economy as poor.
Meanwhile, the data showed no support for the idea that perceiving a bad economy softens the blow of money troubles. Among financially strained workers, those who rated the economy as poor reported levels of powerlessness that were no different from those who rated the economy as fair. Believing the economy is in rough shape neither cushioned the psychological toll of unpaid bills nor amplified it relative to perceiving a middle-of-the-road economy.
Notably, the results in Canada and the United States were nearly identical, challenging the notion that Canadian cultural norms would buffer struggling workers from the psychological downside of a perceived good economy. In addition, although public views of the economy are heavily influenced by partisan politics, accounting for political party identification did not change the findings in either country.
Local realities and study limits
The finding that a perceived bad economy offers no psychological comfort contrasts with earlier studies showing that high local unemployment rates can soften the mental health blow of job insecurity. The authors suggest that objective local hardship and subjective national perceptions may operate through very different social processes.
Living in a town with high unemployment means being physically surrounded by neighbors facing the same struggles, which can generate real-life empathy, community solidarity, and emotional support. Merely believing that the national economy is doing poorly does not automatically surround a struggling worker with an empathetic local support network.
The researchers also note a potential gap between how people view the national economy and how they view their immediate surroundings. A worker might tell a pollster that the national economy is in terrible shape while still seeing plenty of help-wanted signs in their own neighborhood, and those immediate local conditions might carry more weight for their sense of future opportunity.
The authors point out several limitations to keep in mind when interpreting their results. Because the surveys captured a single snapshot in late 2023, a period marked by intense media coverage of post-pandemic economic discontent, the findings show associations rather than cause and effect. It is possible, for instance, that feeling powerless in everyday life influences how a person evaluates the national economy.
The dynamics might also look different during historical periods when a strong majority of the public agrees the economy is booming, rather than a period when economic optimism is a minority view. Finally, while the study finds that perceiving a good economy is associated with a stronger link between financial strain and powerlessness, the survey data cannot pinpoint whether that heightened helplessness is driven more by self-blame or by the resentment of feeling unjustly left behind.
