Why economic indicators no longer convince the public

The perception that numbers point to prosperity but citizens suffer is widespread. A typical example is the Democratic Party’s loss in the 2024 US elections, despite the generally satisfactory state of the economy. Similar phenomena are observed in other developed economies, including Cyprus.

One explanation is that while macroeconomic analysis focuses on changes over time, citizens experience absolute levels. For example, annual inflation in advanced economies currently hovers around 3%, which is not considered problematic, but the cumulative increase in recent years exceeds 10%. The latter indicator is far more important for the standard of living of citizens and the formation of perceptions.

Another factor is that economic analyses are based on averages, while the standard of living of a significant portion of citizens is substantially lower, creating the impression that statistics do not reflect realities. Furthermore, averages hide critical parameters that affect everyday life, for example, price increases in food and energy remain well into double‑digit territory, far above average price increases, and decisively affect perceptions.

A significant shortcoming is the lack of comprehensive information on different socioeconomic groups, based on income, wealth and access to basic services. When inequality increases, the absence of adequate indicators on housing, health and education by economic group limits the ability to understand real living conditions. Inequality indicators are more useful than averages, which focus on GDP growth. Equally important is the absence of systematic happiness statistics and innovation indicators, which offer a more comprehensive picture of social progress.

Other analysts cite as a factor shaping perceptions the inequality and uncertainty caused by recent developments in the field of technology, which disproportionately benefit a very small portion of society.

The growing distrust of public institutions and official information exacerbates the problems and needs to be addressed, both from a communication and political point of view.

From a communication point of view, and given the crucial importance of knowledge as a productive resource in modern societies, it is important for authorities to interpret statistical data objectively, avoiding the temptation of selective and convenient interpretation that offers temporary benefits but exacerbates the problem of broader distrust in institutions. When interpreted objectively, statistical data reflect realities, and policies should indeed be based on real data and analysis.

In an era during which citizens are bombarded daily with both real and fake news, the existence of institutionally independent organizations that serve as guarantors of credibility is of crucial importance. Concurrently, the development of fake news detection tools and public education on this matter are necessary complements that could strengthen trust.

At the same time, at a policy level, initiatives that strengthen citizen benefits from technology in a tangible way, especially for vulnerable groups, are important. Otherwise, citizens will continue to be victims of misinformation.