A 'help wanted' sign is posted in front of restaurant on February 4, 2022, in Los Angeles.
CNN  — 

Public discontent with America’s pandemic-battered economy obscures the good news: Even after inflation, most of the country has been coming out ahead.

Red-hot demand for labor means lower-income workers can command wage increases that outpace rising prices. So can middle-income workers who switch jobs.

Relief checks approved by lawmakers of both parties and sent out by Presidents Donald Trump and Joe Biden have given the majority of households a cushion. Those higher up the income scale have seen handsome increases in the values of their homes and investment assets.

Even those who fault Biden’s policies for exacerbating inflation risks acknowledge that, right now, the pandemic economy continues to offer large, underappreciated rewards.

“For most people,” concludes Michael Strain, who directs economic policy studies at the right-leaning American Enterprise Institute, “the current economic situation is good.”

You couldn’t tell that from public opinion, though. A CNN poll last week showed that just 37% of Americans approve of President Joe Biden’s handling of the economy – fewer than approve of his handling of crime, relations with Russia or protecting democracy.

The highest rate of inflation in four decades – 7.5% on an annual basis in last week’s government data – explains part of the sour mood. Yet that worrisome milestone is directly related to another, more reassuring one: the highest annual economic growth in four decades, with an unemployment rate of just 4%.

Different economists use different measures of economic gains. Inflation looks more threatening when considering 2021 alone, but less so when also incorporating 2020, when initial Covid-19 shutdowns pushed prices down for high-profile expenses such as gasoline.

At realtimeinequality.org, economists at the University of California-Berkeley estimate that disposable income for Americans overall increased by 5.3% after inflation from December 2019 to December 2021. Using that measure, which includes the effects of both labor income and Covid relief payments, the bottom 50% of earners saw their disposable income rise by 10.9%, compared with 3.8% for the middle 40% and 4.4% for the top 10%.

Examining changes in wages alone, Arin Dube of the University of Massachusetts-Amherst estimates that two-thirds of American workers have seen their wages go up after accounting for inflation over the last two years. Over just the last year – when inflation accelerated substantially – roughly one-third of workers have come out ahead, Dube says.

Outsized gains at the bottom of the income scale chip away at inequality and create opportunity for younger workers who fill many lower-skill, lower-paying jobs. The labor market is running hot enough that millions of Americans keep quitting their jobs for higher-paying new ones in what White House economist Bharat Ramamurti calls “The Great Upgrade.”

More affluent older Americans have benefited from booming real estate and financial markets. Since February 2020, the Dow Jones Industrial Average has risen roughly 19%.

To be sure, overall averages conceal the significant chunk of Americans, neither rich nor poor, who have lost ground to inflation in recent months. “There is a missing middle,” Dube says.

It includes small business owners squeezed by higher labor costs, if they can find workers at all. It includes workers who have not switched jobs, settling for the modest pay increases they’d long been accustomed to. It includes renters whose landlords want more when leases expire.

A recent Wells Fargo analysis showed middle-income consumers were hit the hardest by rising gas and used-car prices. It’s most painful for those, without benefit of work-from-home options, who have continued commuting to their jobs.

The middle 40% of earners, according to the Cal-Berkeley economists, have seen their disposable income erode by 1.1% after inflation over the past year. That group looms especially large in American politics.

Public unhappiness incorporates anxiety over the pandemic’s continued ability to disrupt economic activity. The fact that most Americans have gained financially doesn’t mean they will continue to.

“I’d drive a distinction between ‘have benefited’ and ‘will benefit,’ ” observes Strain. He fears that the Federal Reserve’s attempts to temper inflation through higher interest rates could trigger a recession.

Strain was among the relatively few economists who warned a year ago that Biden’s $1.9 trillion American Rescue Plan was too big and risked sparking excessive inflation by overstimulating demand. Many others have belatedly accepted the prescience of those warnings.

“It was bigger than would’ve been ideal,” says liberal economist Dean Baker of the Center for Economic and Policy Research.

Of course, the part of Biden’s rescue plan that economists most lament for unnecessarily fueling inflation was also the most politically irresistible. That was the $1,400 Covid-relief checks for single taxpayers earning $75,000 or less and couples earning $150,000 or less.

The Biden administration has worked for months to ease choke points in the supply chain for scarce goods such as automobiles. But the principal inflation-fighting power lies with the Fed, and Americans unhappy about inflation today may not like tomorrow’s higher borrowing costs much better.

“The people screaming for Biden to do something do not want the Fed to raise interest rates,” says Betsey Stevenson, a former Obama administration economist now at the University of Michigan. “They want more damn cars.”