Here's former Bush administration economic adviser Greg Mankiw's offering an alternative to Krugman's explanation of why people aren't overly excited about the economy:
Bush Begins Effort to Allay Concerns on the Economy, Bloomberg: The war in Iraq also makes it tougher for Bush to reassure Americans, said Harvard economist Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005. ''The perception that things are going badly in Iraq often makes people think that this economy is doing badly even when it's not true,'' he said.
So that's all it is. Just convince people that, rationally, the economy has nothing to do with how badly things are going in Iraq and they will gush at their economic good fortune. Good luck with that one.