Americans ought to be feeling better these days. Companies are hiring again. Layoffs are uncommon. Congress has left town for more than a month!

Yet we seem to be gloomier than ever, even amid tangible signs of improvement in the economy. The latest Wall Street Journal/NBC News poll found that 76% of adults lack confidence that their children's generation will end up better off than their own. When pollsters asked the same question in 2007, just 60% answered that way. Beyond that, 71% think the country is on the wrong track, while 60% say America is in a state of decline. “Americans are registering record levels of anxiety,” the Journal declared.

Something is amiss. The nation struggled through a near-depression in 2008 and 2009, with foreclosures and other credit defaults hitting the highest levels in generations. Yet people are more pessimistic now, even as the unemployment rate has dropped from a peak of 10% in October 2009 to 6.2% last month. Employers are adding roughly 250,000 new jobs per month. Interest rates and inflation are low, and even gas prices, at about $3.50 per gallon, are manageable.

So why aren’t Americans feeling better? Here’s why: We understand that recessions are supposed to be lousy. When they’re over, things are supposed to get better and go back to the way they were. For many, they haven’t. So something must be wrong.

And something is actually wrong.

Unemployment is headed back toward normal levels, but income isn’t. A lot of people who lost jobs during the recession have taken new jobs that pay less than they used to earn. Many people lucky enough to hvae stayed employed during thre receession haven't gotten a meaningful raise in years. The typical family, meanwhile, has lost more than 40% of its net worth since wealth peaked in 2007. Millions of Americans are waiting for income to bounce back and wealth to return—but it isn’t.

The numbers are pretty straightforward. Median household income, adjusted for inflation, is about $54,000 today, according to Census Bureau data analyzed by Sentier Research. That’s nearly 5% lower than median income at the end of 2007, when the recession began. Income could easily remain depressed for a decade or more, a huge step backward that makes it harder for families to save for college education, retirement and other things that generate a sense of satisfaction and prosperity (or fear and loathing, if you consistently fall short).

Story continues

The on-and-off housing recovery directly reflects this income shortfall. A new study by RealtyTrac, for instance, shows that home affordability is worsening in many areas, with homes in about one-third of 1,200 counties analyzed now less affordable than long-term averages. Rising interest rates and house prices are part of the reason homes are becoming less affordable, but the biggest reason in many areas is declining income.

In 84% of U.S. counties, inflation has outpaced median income since 2007, according to RealtyTrac data. That means the vast majority of Americans have less spending power than they did before the recession. So it’s hardly surprising that home sales remain weak and the housing recovery is sputtering. The income slump can even become self-reinforcing, because lower consumer spending means less production and less hiring by companies. And a labor glut, such as still exists in many industries, means pay is likely to stay flat or fall rather than rise.

There have been hints recently that pay in some sectors may finally be picking up. If that sticks, however, it seems likely to be limited to select fields where there’s a shortage of talented workers, such as science and technology and perhaps high-tech manufacturing. Millions of other workers, meanwhile, may simply have to adjust to thriftier times. We don't like it, but at least we get to complain about it when pollsters call and ask.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.