41% of Americans say US is in a recession, poll shows. What do data and experts say?

Large minorities of Americans are pessimistic about the state of the U.S. economy — even as key indicators reveal promising signs of growth, according to a new poll.

Nearly half, 45%, of Americans believe the economy is getting worse, according to a YouGov poll released Jan. 10.

The poll surveyed 1,593 U.S. adult citizens between Jan. 7 and Jan. 9 and has a margin of error of plus or minus 3.2 percentage points.

Additionally, 40% of respondents rated the economy as “poor,” while 41% said the U.S. is currently in a recession.

When it comes to personal finances, responses were similarly gloomy, with 40% of respondents saying they are worse off financially than one year ago.

The poll is just the latest in a string of surveys revealing widespread dissatisfaction with the state of personal finances and the broader economy.

Nearly 70% of respondents to a Suffolk University poll released in September said the economy is heading in the wrong direction.

Similarly, 71% of respondents said the U.S. economy is “not so good” or “poor” in a Quinnipiac University poll released in August. The poll questioned 1,818 U.S. adults and has a margin of error of plus or minus 2.3 percentage points.

Many Republicans have seized on the poor marks, labeling President Joe Biden’s economic policies a failure that put the country at risk of recession.

Former President Donald Trump, the leading contender for the GOP nomination, said he anticipates the U.S. economy will crash, according to the Wall Street Journal.

Biden, though, has praised the state of the U.S. economy, writing in a post on X, formerly known as Twitter, “We’ve created over 14 million jobs since I took office, more than the previous Administration created before the pandemic.”

Despite the competing narratives, economists and multiple economic indicators suggest the U.S. economy is improving — and not in a recession.

What is a recession?

Some experts and analysts define a recession as two quarters of negative real GDP growth, but it isn’t that simple.

The National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee is responsible for determining whether the U.S. economy is in a recession. The committee defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

The committee tracks variables like consumer spending, the cost of consumption, employment and personal income.

Are we in a recession now?

Though a recession is usually not declared until months after it begins, today’s economic activity indicates that the U.S. is not in a recession.

The last time real GDP fell was in the first and second quarters of 2022, and those declines were not big enough for the committee to consider them a recession.

Real GDP grew 4.9% in the third quarter of 2023, the fastest growth since 2021.

Monthly indicators, too, point to a “soft landing,” not a recession.

Consumer prices rose 3.4% in the 12-month period ending in December, according to the Bureau of Labor Statistics’ latest inflation data, released Jan. 11. Between November and December, prices climbed just 0.3%. That’s higher than November’s data, but it’s still a significant relief from December 2022’s annual rate of 6.5% and much closer to the Federal Reserve’s goal of 2%.

And as the growth in prices has slowed, workers’ wages have been on the rise — even outpacing inflation, according to an analysis by the Center for American Progress. Since the fourth quarter of 2019, prices have grown a cumulative 20%, while wages have grown 23%.

“If wages rise more quickly than prices, workers can maintain or improve their standard of living,” the analysis said. “In fact, real wages for a typical worker stand at about the level expected if there had been no pandemic or recession in early 2020 and if they had kept growing at the same rate as in years prior.”

Employment has stayed resilient as well. In December, the labor market added 216,000 jobs, and the unemployment rate remained unchanged at 3.7%, the Bureau of Labor Statistics said in a Jan. 5 release.

Possibly the most important factor right now is consumer spending – which has stayed remarkably strong, surprising analysts.

Consumer spending, measured by an index known as personal consumption expenditure or PCE, grew 2.6% between November 2022 and November 2023, according to data from the Bureau of Economic Analysis.

Strong spending was bolstered even more by the holiday season. A Mastercard analysis measuring in-store and online retail sales across all forms of payment found that retail sales in the U.S. grew 3.1% between Nov. 1 and Dec. 24 compared to the previous year.

“It seems likely the economy may avoid a recession in the near term, though we can expect that real GDP growth will remain modest over time,” Matt Schoeppner, a senior economist, said in a U.S. Bank analysis. “It might qualify as what we call a ‘growth recession,’ where we see a slow economy, but with few ramifications for the job market.”

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