The Bad Side of a Good Economy
When people are struggling financially, believing the economy is doing well can actually make them feel more powerless — not less. Replicated across 4,967 U.S. and Canadian workers.
What we studied
In late 2023, many people in both the United States and Canada felt gloomy about the economy — even when key economic indicators looked relatively healthy. Commentators called this a "vibecession": a recession in mood, if not in reality.
This raised a question: if your perception of the economy doesn't necessarily reflect your own financial situation, does it still shape how you feel about your life? We focused on one specific outcome: powerlessness — the feeling that you have little control over what happens in your own life. Decades of research have established that financial hardship makes people feel more powerless.
The new question we asked is whether your view of the broader economy changes how much financial strain affects that sense of powerlessness. We surveyed more than 2,400 American workers and more than 2,500 Canadian workers, asking about their personal financial struggles, how they rated the economy (poor, fair, or good), and how much control they felt over their own lives.
We tested two competing predictions. A comparison-protection account predicts that a bad economy is reassuring, because struggling financially feels less personal when everyone else is struggling too. A meritocratic-attribution account predicts the opposite — that a good economy makes financial strain feel worse, because if times are good and you're still struggling, you may blame yourself. Only the meritocratic-attribution prediction held up in the data, and it held up in both countries.
What we found
As expected, people who reported more financial strain — trouble paying bills, not having enough money for necessities — also reported greater feelings of powerlessness. That part is well-established in the research literature. The new finding is what happened when we looked at the role of economic perceptions.
Among people who were financially struggling, those who perceived the economy as good felt clearly more powerless than those who saw it as fair or poor. Perceiving a poor economy, by contrast, did not change the relationship between financial strain and powerlessness in any meaningful way. Financially struggling in the context of a good economy may encourage people to attribute that strain to internal causes — their own character or choices — rather than to broader economic forces. When times look good for everyone else but you're still struggling, it can feel like your fault — and that self-blame intensifies the sense of being out of control.
This is consistent with widely-held beliefs in meritocracy: the idea that hard work and ability determine success. When the economy appears healthy, those who are still falling behind may be more likely to internalize their difficulties. The pattern was strikingly consistent across both the United States and Canada — two countries that differ in their cultural emphasis on individualism and meritocracy.
What this means
Three evidence-based suggestions for workers, employers, and policymakers follow.
Be alert to hidden distress during "good" economic times
When the broader economy appears to be doing well, employers may assume their workers are financially secure — and reduce attention to financial wellness supports. Our findings suggest the opposite may be needed. Workers who are quietly struggling during a perceived boom may be experiencing especially intense feelings of self-blame and powerlessness. Employee assistance programs, financial counselling access, and stigma-free conversations about financial hardship are especially valuable when economic headlines are positive.
Think carefully about how economic narratives reach struggling workers
Media coverage and political messaging about a "strong economy" can inadvertently increase the psychological burden on those still struggling. Public communications that acknowledge that economic growth is uneven — that good headline numbers don't mean everyone is benefiting — may help reduce the internalization of financial hardship. Framing economic challenges as structural rather than purely individual can protect the mental wellbeing of those who are left behind in an otherwise strong economy.
Recognize that struggling in a "good" economy is not a personal failing
Our findings suggest that people who are financially struggling during a perceived economic upswing are at particular risk of feeling powerless — perhaps because meritocratic thinking leads them to blame themselves. If you are experiencing financial strain, it is worth knowing that economic conditions affect people very unevenly, and that personal financial hardship is not simply a reflection of personal effort or character. Seeking support — whether financial advice, community resources, or mental health care — is a sign of agency, not weakness.