One big thing is dragging down Americans' vibes about the economy

Americans' wallets are feeling the strain of inflation outpacing wages.

Spencer Platt/Getty Images US consumer sentiment is worse than in the pandemic years.

One likely reason is that wage growth isn't keeping up with inflation.

The sky-high inflation of a few years ago has had lingering effects on workers.

Americans' wages aren't keeping up with the cost of living, and it's likely dragging down how they feel about the economy.

The economy is still slowly growing, consumers are still spending, and both unemployment and layoffs are low.

However, consumer sentiment, as measured by the University of Michigan's monthly survey, remains worse than during the COVID period.

One big factor could explain why: Inflation has exceeded wage growth for four straight months.

"Consumers' frustration over the erosion of their purchasing power continues to mount," Joanne Hsu, University of Michigan's surveys of consumers director, said.

The survey showed almost three-quarters of consumers in August thought price growth would outpace their income growth over the next year.

Hsu said many people are worried that higher energy prices will affect other parts of the economy.

"A sustained drop in gasoline prices over the course of several months (in contrast to temporary dips) would go a long way in boosting consumer views of the economy," Hsu said.

Wage growth lagging inflation is not the only concerning trend in the economy.

For instance, labor force participation is at its lowest level in decades outside the pandemic.