(The opinions expressed in guest op-eds are those of the writer and do not necessarily represent the views of RedState.com.)
Recent days have seen the Biden administration trying to convince Americans that America’s economy is strong and there are no signs of recession. The administration also has taken great pains to define what constitutes recession. Many believe this is a game of words rather than addressing the reality that the U.S. is on the verge of falling into recession.
First, the definition of recession has been established since 1974 as two quarters consecutively of negative GDP growth.
The U.S. economy suffered a 1.6 percent drop in the first quarter 2022. It seems likely that the GDP for the second quarter of 2022 will register in red. That means the U.S. is on the verge of going into recession according to traditional economics.
Multiple polls have shown that the majority of Americans believe that the U.S. has fallen into recession. For instance, per a recent Investor’s Business Daily (IBD) survey, “A clear majority of Americans — 58% — think the U.S. economy is in a recession, up from 53% a month ago and 48% in May.”
Why is so large a percentage of Americans believing that recession has already begun?
According to the IBD survey, Americans are most concerned about inflation taking away their small wage gains. This explains why the “near-term outlook for personal finances just hit a record low for the survey back to February 2001.”
What’s more, most Americans do not see inflation improving anytime soon. “The IBD/TIPP Poll finds that just 19% of adults say their wages have kept pace with inflation, while 54% say they haven’t kept pace. Meanwhile, 91% of Americans are concerned about the path of inflation over the next 12 months.”
Americans are concerned that the labor market is not functioning properly, and this may lead to higher inflation. The unemployment rate, at 3.6%, is very low. However, 62.2 percent of the population is now employed and this number has fallen in recent years. Comparatively, it was 63.4 percent prior to the pandemic in 2001 and 67.7 percent by late 2001.
The number of jobless is also rising, despite the U.S. having more than 11.3million jobs. This means that far too many Americans are still out of work for any reason. It is also likely to be a contributing factor in the declining GDP and other recessionary concerns.
Although the White House continually touts the strength of the labor market, Americans seem to have a different view. Per the IDP poll, “41% of households have at least one member who is out of work and looking for employment, down 1 point from June. The month’s data shows that 36% of households are worried about losing their job, an increase of 6 percentage points. Factoring in the overlap, the share of job-sensitive households is currently 53%.”
In addition to this, stocks have taken significant losses in the last months. This has fueled fears that the U.S. isn’t on solid footing. Walmart just released its most recent earnings report this week. It was not stellar and raised concerns about a recession.
However, it will be clear very soon whether the U.S. economic is actually in recession. This is what most Americans believe. No matter what, the White House is sure to be on full-throttle spin mode for the next few days.
Chris Talgo ([email protected]) Senior editor, The Heartland Institute
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