Despite the fact that the U.S. economy appears to be thriving by many standards, there is a prevailing perception among Americans that the country is currently in a recession. According to a recent survey conducted by Affirm, approximately 60% of respondents believe that the U.S. has been in a recession since March of the previous year, with predictions that it could last until July of 2025. This perception is largely fueled by the rising costs of living and the challenges faced by individuals in making ends meet.
The impact of persistent inflation on households cannot be overlooked. Vishal Kapoor, senior vice president of product at Affirm, highlights that the confidence in the U.S. economy is at a low point, prompting consumers to seek ways to regain control over their finances. Despite the consistent growth in gross domestic product over recent years, a Guardian/Harris poll from May revealed that 56% of participants perceived the country to be in a recession. The National Bureau of Economic Research defines a recession as a substantial decline in economic activity spread across various sectors, lasting more than a few months.
Economists have been grappling with the discrepancy between the economic performance indicators and the general public’s sentiment regarding their financial well-being. This so-called “vibecession,” as described by Joyce Chang from JPMorgan, highlights the stark disparities in wealth distribution. While homeowners and individuals in the upper-income brackets have seen significant gains, a significant portion of the population has been left behind. The concentration of wealth creation among select groups has contributed to the perception of an economic downturn among many Americans.
The repercussions of rising prices and interest rates are becoming increasingly evident as more households struggle to keep up with their financial obligations. A growing number of consumers are falling behind on their credit card payments, with approximately 8.9% of credit card balances transitioning into delinquency within the past year, according to a report from the New York Fed. This trend signifies the underlying financial strain faced by individuals and families as they navigate the current economic landscape.
Despite the positive economic indicators at a broader level, the perception of a recession looms large among many Americans. The challenges posed by inflation, wealth disparities, and financial strain are contributing to a sense of unease and uncertainty regarding the country’s economic future. Addressing these issues will require a comprehensive approach that takes into account the concerns and struggles of those who feel left behind in the current economic environment.