A new Reuters poll says 45% of Americans believe there will be a recession in the next year. The National Bureau of Economic Research (NBER), which determines whether the economy is in recession, may already be prepared to say one is underway. The organization defines a recession as a “significant decline in economic activity spread across the economy and that lasts more than a few months.”
24/7 Wall St. Key Points:
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Many Americans believe there will be a recession in the next year.
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There are plenty of signs that say one is already underway.
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The Survey of Consumers released by the University of Michigan has had three straight monthly declines. That means the drop started in December. It worsened through March when it dropped a near-record 11%. Additionally, “This decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region, and political affiliation.” In March, it had dropped 30% since December.
The Bureau of Labor Statistics announced that the economy added 228,000 workers, and unemployment rose to 4.2%. What is rarely mentioned is that 7 million people were out of jobs last month. People were out of jobs for 27 weeks; more hit 1.7 million. The number of people who would like full-time jobs but only work part-time was 4.8 million.
The Atlanta Fed’s GDPNow shows gross domestic product dropped 2.2% in the first quarter.
The real estate market is in a tailspin. In March, housing starts fell 1.4% from April. Home prices have started falling in several of America’s largest cities, including Chicago, Phoenix, and Austin. Home prices have risen almost every month for three years.
Delinquency rates on credit cards and car loans have started to rise faster. Consumers do not have enough money to handle the debt they have built up over the past few years. A consumer with stretched financials will not contribute to the spending that drives GDP.
For the current quarter, 400,000 federal employees have or will lose their jobs. Tariffs will curb the economy and make many consumer goods more expensive. There has not been a meaningful rise since September 2021. In May or June, it will surge.
The economy is sinking. From the standpoint of a recession, it has already sunk.
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