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Hey, America, here's what's actually going on with the economy

Madison Hoff   

Hey, America, here's what's actually going on with the economy
  • The US isn't in a recession; a majority of Americans in a Harris poll for the Guardian said there is one.
  • Media coverage is one possible explanation for why Americans feel the economy isn't doing so great.

Hey, America, we totally understand if you're not feeling so great about the economy.

But if you think we're in a recession, here's some good news: We're not in one, and there likely isn't one coming, based on economic data and what experts who talked to Business Insider are seeing.

A Harris poll for the Guardian found 56% of Americans believe the US is in a recession. Plus, it found a majority think we have a shrinking economy. Two reasons people may be feeling like the economy isn't doing so well — despite the US not being in an official recession since the two-month one in early 2020 — are due to media coverage and how people view economic trends.

David Kelly, chief global strategist at J.P. Morgan Asset Management; Eugenio Alemán, Raymond James' chief economist; and Gregory Daco, EY's chief economist, told Business Insider the US isn't in a recession.

"Americans' negative attitude towards the economy is largely due to incessantly negative media coverage of economic and social issues amplified by an even more negative social media feed," Kelly told Business Insider in a statement.

Of course, not everything is perfect, and that could sour people's views. Daco said that when you consider cost fatigue, inflation's cumulative effect, the largely frozen and unaffordable housing market, and also "the reduced amount of churn in the labor market and this perception that there are fewer opportunities out there in terms of jobs, then that leads to more pessimism about the implied state of the economy."

"And I think that's really what we're seeing in terms of this particular survey — is that there is this difference between how people perceive consumer spending trends, inflationary trends, employment trends, and how they are from a data perspective," Daco said, adding "that misperception is exacerbated by the fact that we have different sources of intelligence, different media sources that may bias the underlying take as to how the economy is behaving."

If you're interested in learning more about what's going on with the economy take a look at the charts below.

US GDP is still growing

Kelly listed "growth and expected growth in quarterly GDP" as one of the "most important numbers to watch" in addition to payroll gains — which recently cooled but are still signaling a strong labor market — and the weekly unemployment insurance claims — which have been low as large-scale layoffs have not yet emerged.

Real GDP for the US has continued to be robust, even if growth has been slowing.

Unemployment rates in the US have been low

The unemployment rate did climb from 3.8% in March to 3.9% in April, but that's still low.

"We're still seeing strong job growth momentum," Daco said. "We have a historically low unemployment rate."

In the Great Recession, the US unemployment rate skyrocketed from 5.0% in December 2007 to 9.5% in June 2009. It took years for the job market to fully recover after that recession, while unemployment plummeted after the brief but deep Covid recession in 2020.

CPI data shows US inflation is stubborn but has been under 4%

Inflation is still elevated and stubborn, but the year-over-year change in the Consumer Price Index has cooled from the high 2021 and 2022 rates. Alemán said while inflation is comparatively low, "the surge in inflation since 2021 has pushed Americans to try to figure out what to buy and what not to buy — something that we were not used to doing before."

"Probably the cost of searching for a better price has put a lot of stress into Americans' lives that they did not have before," Alemán said.

The S&P 500 has generally been rising for over a year

In 2024, the S&P 500 hit multiple all-time highs. The Harris poll for the Guardian found nearly half thought the S&P 500 index had actually been down.

There isn't a US recession now or one coming soon either

If you're worried about a recession coming soon, you may feel better knowing that experts don't think so. Alemán said Raymond James doesn't foresee one but expects a slowdown in economic activity. Looking at the next 12 months, Daco said recession odds are relatively low. Kelly said the US isn't "even close" to a recession.

"Indeed, the so-called 'misery index', the sum of the inflation rate and the unemployment rate is currently 7.3%," Kelly said. "This is better, that is lower, than it has been more than 75% of the time over the past 60 years."

There are still some data points and trends Americans may be concerned about. Sales for existing homes and new homes dropped recently. While mortgage rates are back below 7%, they're still elevated. Layoffs are happening at some major companies, inflation is still not back to the Fed's 2% target, and it looks like interest rates are still going to be high for a while.

"The longer we have very, very high interest rates as we have today, that will increase the probability that something will break and that we might face a recession in the future," Alemán said.

So hooray for no recession and likely no recession anytime soon. However, just because we aren't in a recession doesn't mean the economy is perfect.

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