We are not in a recession.
“We’re in a Goldilocks economy right now,” said Gene Goldman, chief investment officer at Cetera Financial Group in El Segundo, California.
The country’s economy has continued to expand since the coronavirus pandemic, avoiding previous recession predictions.
Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that spreads throughout the economy and lasts for more than a few months.” The last time that happened was in early 2020, when the economy came to an abrupt halt.
The past century has seen more than a dozen recessions, some of which lasted as long as a year and a half.
Still, regardless of the state of the nation’s economy, many Americans are struggling with the rising cost of everyday items, with most having exhausted their savings and now turning to credit cards to make ends meet.
“Money is a top priority,” said Vishal Kapoor, senior vice president of product at Affirm. “Consumers are resilient, but they’re feeling the pain of rising prices.”
Economists are troubled by the widening disconnect between the current state of the economy and how people feel about their financial situation.
We are in a “vibrational recession”
We’re in a “recession,” Joyce Chang, global research chair at JPMorgan, said at the CNBC Financial Advisor Summit in May.
Over the past few years, “wealth creation has been concentrated among homeowners and high-income earners, but that has left about a third of the population behind,” Chan said. “That’s why you see this disconnect.”
Rising rents, high borrowing costs and slow wage growth are combining to hit some people especially hard. “Low-income families are not keeping up,” Goldman said. “Everything seems fine, but if you look beneath the surface, the gap between the wealthy and the non-wealthy has widened dramatically.”
But it’s not just “atmosphere.”
New signs of financial strain are emerging as more consumers try to cover rising prices and interest rates.
More borrowers are falling behind on their monthly credit card payments: About 9.1% of credit card balances fell into delinquency over the past year, the New York Fed said in its second-quarter 2024 report, and it expects more middle-income households to struggle to make debt payments in the coming months.
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