Trust in institutions – and each other.

Trust — the belief in the reliability, honesty, and integrity of a person or thing — is a prerequisite for collective action. The earliest human communities were built on familial trust, bound by kinship and direct personal relationships. As our species evolved through language, advanced cognition, and culture, so did our capacity for cooperation. We shifted from one-to-one trust models to increasingly complex systems, eventually building institutions — governments, corporations, banks, hospitals, religious organizations, universities, media outlets, and nonprofits — that coordinate millions or billions of people who will never meet face to face. These institutions work precisely because trust enables cooperation between strangers, facilitates transactions, and builds the social capital that allows modern societies to function.

Trust is built through cycles of risk and reciprocity, when one person sets self-interest aside and gives control or resources to another person or organization, then sees them offer the same in return. Of course, trust can also be lost. Institutions have lost trust throughout history — from the fall of the Roman Empire to the South Sea Bubble. While these collapses were documented by historians, systematic measurement of trust and social capital is a newer endeavor, with data collection beginning in the late 20th century. What that data reveals is troubling: Overall trust in institutions has been eroding since the early 2000s, reflecting widespread grievances and making it harder to solve collective problems.

Ensuring continued economic prosperity, democratic stability, and human progress will demand cooperation — and cooperation at scale requires trust. An aging population with fewer workers supporting more retirees requires new social contracts and institutional reforms. AI reshaping work demands societal trust that displaced workers won’t be abandoned and that automation will augment rather than replace human dignity. Achieving energy abundance depends on trust (and sustained cooperation) among political, financial, and scientific divides. And rebuilding social connection requires trust in one another.  

Trust can be rebuilt. Unlike other megatrends we’ve examined in our Nowcasting series, the path forward doesn’t require new frameworks or complex theories. Researchers already know what builds trust: demonstrating competence, showing genuine care for people’s wellbeing, and acting with integrity. Rebuilding trust in institutions starts with individuals and leaders choosing to embody these principles –– because when we trust each other, we can trust what we build together.

What’s true right now

It is hard to overstate the current erosion of trust in America. Nearly every major trust survey, including those from Gallup, Pew Research Center, the University of Chicago, and Edelman, indicate that Americans have lost trust in most institutions. 

Only 17% trust the federal government to do the right thing. Confidence in public schools is at its lowest since 2004, with only 13% giving our nation’s schools an “A” or “B” grade. Trust in media is also at an all time low of 28%, with only 8% of Republicans trusting mass media to report news “fully, accurately and fairly.” Between 2021 and 2024, trust in hospitals and pharmacies decreased 5% and 8%, respectively. In Edelman’s global survey, a majority of respondents worry that leaders in business, politics, and media “purposely mislead people by saying things they know are false or gross exaggerations.” While business is perceived as a net positive for society by most, “only 43% fully trust businesses to act in society’s best interest.” Americans also trust each other less: Interpersonal trust has declined 12% since 1972, plateauing at 34%.

The erosion of trust can be attributed to a number of factors. Digital technology is a double-edged sword of human progress; it both increases access to information and fosters polarization. The internet connects 6 billion people –– a demonstration of human cooperation and achievement that our ancestors could not fathom. And yet modern digital platforms foster divisiveness and erode trust by creating echo chambers and doing away with fact-checking. Meanwhile, institutional failures — from “too big to fail” financial crises to inconsistent Covid responses — and widening economic inequality have deepened the distance between “us” and “them.” 

In most nations, levels of trust increase with GDP output, and yet the U.S. is an outlier, scoring far below its relative economic dominance. On an individual level, both low life satisfaction and low income are associated with low trust: Individuals with lower incomes trust institutions 13% less than high-income individuals. Lack of fairness also erodes trust, with three in four Americans experiencing discrimination based on race, gender, age, politics, appearance, or ways of speaking.

Impacts and implications

Individual well-being and advancement

Trust isn’t just a social nicety — it’s a health indicator. People with higher levels of trust in individuals and institutions report higher subjective well-being. The relationship is bidirectional: Trust promotes well-being, and well-being reinforces trust over time, creating either virtuous or vicious cycles. When people trust institutions, they also feel more secure. The inverse is true, too: Declining trust in government erodes the psychological safety that enables broader social trust. When institutions fail to earn trust, they don’t just damage their own legitimacy — they undermine foundational interpersonal trust that can lead to social isolation. Perhaps most concerning: Over half of young adults in the U.S. see hostile activism as viable means to drive change. 

Trust also positively correlates to health-seeking behavior, such as getting a flu shot or scheduling an annual physical examination. The differences are outstanding: Only 35% of those with the lowest trust in the health care system had a flu shot, compared with 68% of those with the highest trust levels. When a community’s trust in public health measures declines, both the individual and the collective are negatively impacted. This lack of trust in turn affects healthcare providers’ sense of value, contributing to burnout and worsening America’s healthcare worker shortage. 

Education faces a parallel crisis. Trust determines how families engage with schools and whether educators can build the relationships necessary for effective teaching. A longitudinal study of 400 Chicago public elementary schools found that relational trust among parents, teachers, and school leadership was a strong predictor of successful school reform. Schools with high trust levels were significantly more likely to improve math and reading scores than low-trust schools.

Roughly half of U.S. adults say public K-12 education is heading in the wrong direction, citing not enough time spent on core subjects. Furthermore, 59% of Americans say they would send their children to private or religious schools if offered public funds. The school choice debate illustrates how low trust creates policy gridlock. School choice — often positioned as exclusively conservative — actually has progressive roots dating to civil rights-era efforts to provide alternatives for disadvantaged students. Yet despite broad interest in alternatives and widespread agreement that reform is necessary, there’s little consensus on how to experiment, compromise, or implement changes that might work. The result is paralysis precisely when schools must adapt for a generation of AI-native students who will join future work environments we can scarcely imagine. 

Business and the economy

Countries where businesses, governments, and institutions have engendered higher trust experience stronger per capita GDP growth. The relationship is well-established: Trust reduces transaction costs, encourages long-term investment, and enables the cooperation required for complex economic activity. When trust erodes, so does economic stability.

Stanford finance professor Amit Seru argues that the U.S. is in a “credibility recession.” The erosion of trust in governmental and financial institutions poses a macroeconomic risk with far-reaching impacts. Eroding credibility affects everything, from how investors price assets to whether people believe their bank deposits are safe. When markets suspect political interference might steer interest rates or bank regulation, the Fed’s signals lose power. Investors start pricing in future instability rather than policy coherence, which can trigger capital flight, raise borrowing costs, and diminish U.S. leadership in global finance.

The challenge is particularly acute because, as Seru notes, “unlike rates, trust is much harder to reset.” Interest rates can be adjusted in response to economic conditions. Trust requires sustained competence, transparency, and integrity — demonstrated over time, across administrations, and without shortcuts. In an economy built on complex financial instruments, global capital flows, and interdependent institutions, trust isn’t a soft variable to monitor when convenient. It’s the infrastructure that makes modern capitalism function.

Trust implications cascade down to individual workplace experiences: Geopolitical instability reduces job security, leaders are not trusted to do what is right, and the wealthy are perceived to take more than their share. Grievances of this nature are harmful at the individual and collective level, contributing to a lack of belonging and undermining organizational effectiveness — but the deeper threat is what they signal about trust in the economic system itself.

Economic mobility has collapsed. Absolute mobility dropped from approximately 90% for children born in 1940 to 50% for children born in the 1980s, eroding a core tenet of the American Dream. When only half of children can expect to earn more than their parents — down from near-certainty just two generations ago — it fundamentally alters the psychological contract between workers and the economy. When economic disparities stem from family background, connections, or luck rather than merit, trust in both institutions and other people erodes.

This erosion of trust creates a dangerous feedback loop. When people don’t believe hard work leads to advancement, they pull back from the investments that drive economic growth, such as acquiring new skills, starting businesses, or taking career risks. The result is slower productivity growth, less innovation, and reduced economic dynamism precisely when demographic shifts will demand higher output per worker.

Government and policy

Americans like democracy in theory but don’t believe it works in practice. About two-thirds believe democracy is the best form of government, yet only about one-quarter think it’s functioning very or moderately well in the United States. This marks a dramatic shift from decades past, when most Americans believed the system was working as intended.

While overall trust in government is on the decline, the partisan nature of this erosion further complicates efforts to rebuild it. Trust now swings dramatically based on which party holds the White House. Case in point: After the 2024 election, Republican trust jumped from 11% to 26%, while Democratic trust plunged from 35% to an all-time low of 9%. This partisan see-saw creates a zero-sum dynamic where rebuilding durable, broad-based trust becomes increasingly difficult. 

The path forward may require moving beyond reforms aimed at restoring trust in government writ large, and instead starting with local community input and open civic engagement models. Americans trust local government more than federal institutions, suggesting that personal connection and proximity matter even when addressing national challenges.

Despite popular framing, 80% of federal employees work outside of the D.C. area. And Americans still believe in civil service, but attracting talent to the public sector will be hard if it is not perceived as a viable or valued career path. Highlighting federal employees’ expertise and contributions at the local and national levels may foster more relational trust. People already trust government workers — from firefighters and teachers to research scientists and weather forecasters. Humanizing government means making these connections more visible: showing that institutions are made up of the same people we rely on every day.

 

If you have burning questions about our present moment, or if you’d like to chat with us about how to use nowcasting as part of your own organization’s planning and strategy, we’d love to hear from you: Email nowcasting@luminary-labs.com to connect with us.

Receive insights and updates — including our nowcasting series — in your inbox: Subscribe to the Lab Report.

Photo by Efrem Efre.