As economic challenges persist, a significant majority of Americans believe that the U.S. economy has already entered a recession, despite official data suggesting otherwise. A recent survey conducted by Bankrate revealed that 59% of U.S. adults feel the economy is in a recession, driven largely by rising costs and stagnant wages, with many citing personal financial struggles as the reason for their belief.
This sentiment crosses income levels, with 60% of households earning under $50,000 annually and 61% of those earning over $100,000 agreeing that the economy feels like it's in a recession. Notably, Gen Xers, aged 43-58, are the most likely to hold this view, with 65% expressing this belief, followed by Millennials and Baby Boomers.
RIP The great recession of August 2024 pic.twitter.com/JJjgm7isvQ
— Ryan Detrick, CMT (@RyanDetrick) August 15, 2024
Economists have pointed out a growing disconnect between how the economy is performing on paper and how it is perceived by the public. Officially, the U.S. economy has not experienced a recession since early 2020 during the COVID-19 pandemic. The National Bureau of Economic Research (NBER) defines a recession as a "significant decline in economic activity that is spread across the economy and lasts more than a few months." However, recent economic indicators show some warning signs, including rising unemployment and sluggish economic growth, which have fueled public fears.
The economic concerns are further compounded by inflation, which has increased the cost of living by more than 21% since 2020, according to the Consumer Price Index. This inflationary pressure, combined with stagnant wages, has left many Americans struggling to make ends meet. A survey by Affirm found that most respondents believe the recession began around March 2023 and could last until mid-2025.
Four years ago today, the stock market logged its worst week since the Great Recession
Today, the Dow, S&P 500, and Nasdaq hit the highest level they’ve ever been in history pic.twitter.com/qF3sVJ26Rt
— Kamala HQ (@KamalaHQ) March 21, 2024
The pessimistic outlook on the economy is also reflected in consumer behavior. Nearly two-thirds of Americans report that the current economic environment has negatively impacted their finances, prompting many to change their spending habits. The Bankrate survey found that 64% of respondents have adjusted their financial practices this year, with 81% of those who believe the economy is in a recession making significant changes.
This widespread belief in a recession persists even as the U.S. economy has shown signs of resilience. The second quarter of 2024 saw a growth in gross domestic product (GDP) at an annualized rate of 2.8%, which was well above economists' expectations and double the rate of the first quarter. Yet, for many Americans, the economic recovery remains elusive, as rising costs and financial instability continue to overshadow positive economic data.
The divergence between economic data and public sentiment underscores the complexity of the current economic landscape.
While the economy may not meet the technical definition of a recession, the lived experiences of many Americans tell a different story. As the Biden administration continues to promote its economic policies, it faces the challenge of addressing the financial anxieties that have led the majority of the public to believe that a recession is already here.
