Inflation down to 3% year over year

This morning’s CPI report for June was even better than expected, with prices rising just .2% month over month (.3% core inflation), which resulted in a 3% year over year inflation rate, i.e., barely above the Fed’s traditional target rate.

When combined with a historically low 3.5% unemployment rate, plus average wage increases of 4.5% year over year, it’s striking how big of a disjunction exists between the public perception that the US economy is bad at the moment, and the actual economic numbers.

What could be causing public opinion to have so little correlation with the broader economic situation? This is one of those mysteries, like the square root of a million, that will probably never be solved.