It's an experienced reality indeed, but THEN you create a narrative based on that. Obviously.
Experienced reality is, by definition, subjective and affected by filters for what you can, and how, experience things.
For instance, you can actually and truly experience something as bad, and then create a narrative around that. And you can be right, or you can be wrong in the narrative. Some narcissists experience themselves as a victim and unfairly treated, but everybody around them thinks the victim narrative is wrong, because they can clearly see that they are primarily at fault for their own situation.
So you just shifted the question to: "Why do people have a bias towards experience something as worsening, regardless of objective measures of quality"?