‘Americans are literally getting squeezed’: A top economist explains why your wages are shrinking while the wealthy continue to take vacations

(SeaPRwire) –   Consumer sentiment in the U.S. has never been worse, hitting a record low. The University of Michigan’s final April reading stood at 49.8—the lowest in the survey’s 74-year history—with three of the four worst readings occurring within the past nine months.

It’s worth noting that sentiment surveys have faced criticism over time. Economists have long pointed to a growing gap between what consumers report and how they actually behave. Gen Z economic commentator Kyla Scanlon popularized the term “vibecession” to describe periods when negative sentiment contrasted with strong spending during the Biden administration.

Analysts also highlight that these surveys can be influenced by political bias. A 2024 study from the Federal Reserve Bank of Richmond found that individuals perceive the economy as 31% better than objective data indicates if their political party holds the White House.

The issue may lie not in how people feel, but in the language they’ve come to use. Heather Long, chief economist at Navy Federal Credit Union and former pandemic recession reporter, believes the sentiment reflects real financial strain.

“Americans are literally getting squeezed now,” she told . “This isn’t just a feeling—it’s a financial reality.”

U.S. workers have shown remarkable resilience amid five years of persistent inflation. But this spring could signal a shift. Average hourly earnings rose 3.6% year-over-year, according to Friday’s Bureau of Labor Statistics jobs report. April inflation is expected to remain high—around 4%—fueled by geopolitical tensions involving Iran and U.S.-Israeli conflict, as well as national gas prices surpassing $4.55 per gallon.

Joseph Brusuelas, chief economist at RSM, warned this week that real average hourly earnings will likely be flat or even negative for April and “definitely negative” in May once supply disruptions from the Middle East crisis ripple through the economy. In other words, workers may face pay cuts due to a war most didn’t support.

Retail sales continue to climb—March receipts were up 4% year over year—but the National Retail Federation’s chief economist, Mark Mathews, noted the trend is “bifurcated,” with higher-income households driving most of the growth.

For lower-income Americans, the pressure is already evident. A recent Federal Reserve Bank of New York analysis revealed a “K-shaped pattern at the pump”: wealthier households maintained pre-war gasoline consumption levels, while lower-income households sharply reduced fuel use, turning instead to public transit where available.

Bank of America research showed the widest wage growth gap between high- and low/middle-income households since 2015.

Long observes similar divides in Navy Federal’s data, which tracks spending across more than 14 million households—many military and working-class families.

“There are those earning roughly $150,000 or more in New York, or $125,000 or more elsewhere—there’s no recession in their world,” she said. “They’re still booking summer vacations.”

She pointed to Disney’s confirmation that domestic park bookings and cruise reservations remain strong through the second half of 2026—a sign, she said, of robust demand from the top income bracket.

Meanwhile, the bottom half of earners confront a very different situation. “The lower tier was already under stress, and now it’s really tough,” Long explained. She’s seeing more applicants for personal loans and increased reliance on credit cards—people using debt because they can’t make ends meet paycheck to paycheck. This divergence is increasingly referred to by economists as the “K-shaped” recovery: the wealthy rising while others fall behind. As the stock market hits new highs—Friday marked the S&P 500 crossing 7,400—the equity-rich continue to prosper.

The same forces powering market gains are widening the gap between capital and labor. Mohamed El-Erian, chief economic adviser at Allianz, emphasized Friday that subdued wage growth in the April jobs report (which markets view positively by easing inflation fears) underscores a deeper concern: labor’s share of GDP has been declining for two decades and recently reached its lowest point in Bureau of Labor Statistics history.

Still, Friday’s employment data eased fears of a full-blown recession. The U.S. added 115,000 jobs in April, and unemployment held steady at 4.3%. Hiring activity is broader than it has been in months.

But the squeeze Long described unfolds on a timeline distinct from payroll numbers—it first appears in rising credit card balances, then in reduced gas demand, then in canceled vacations among those who could barely afford them to begin with.

Before any of that, it surfaces in sentiment. Sentiment could be misleading, as some economists caution. Or it might represent the first visible crack.