The US Isn’t in a Recession. But Many Americans Think It Is
By: Anneken Tappe · July 25, 2024 · Reading Time: 2 minutes
Recession Illusion
Officially, the U.S. economy is not in a recession. Despite the post-pandemic stretch of historically high inflation, stringent interest rate policy by the Federal Reserve, and concerns over consumer spending, the economy is still growing. Why then, do a whopping 3 in 5 Americans believe the U.S. is currently in a recession?
Stark Sentiment
A traditional definition of a recession is two consecutive quarters of negative GDP growth. This hasn’t been the case since the pandemic recession, which was as extreme as it was brief.
But since then, the economy has been growing again. Nevertheless, many Americans believe a recession began in March 2023 and could last another year, according to a July survey from buy now, pay later company Affirm (AFRM).
The reason? More than two-thirds (68%) of respondents cited the rising cost of living and inflationary pressures, saying the current inflation rate is negatively impacting their financial health and goals.
Bad Vibes
The survey results are further evidence of what some have dubbed a “vibecession”, where the economy feels in a slump even though the data show otherwise.
It’s another strike against the bifurcated U.S. economy, in which wealthier households have an easier time existing and spending in their high cost environments, while less wealthy households struggle to make ends meet.
The real concern here is that consumers could start spending as though they’re in a recession, dialing back and delaying purchases, which would be bad news for economic growth.
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