Economic signals are blinking green. Why Americans are still seeing red.

The American economy reads a little like a Dickens novel these days – and for Joe Biden, it’s in desperate need of a plot twist.

For more than a year, the narrative has been stuck between “best of times” data and “worst of times” sentiment. Unemployment has been incredibly low and consumer spending abnormally resilient. But consumers have proved dour, unwilling to give President Biden much credit because of the sting of recent high inflation and continuing sky-high housing costs.

Now, the United States is poised – maybe – to...