We are not in a recession.
“We have a moderate economy 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 COVID-19 pandemic, outpacing previous recession expectations.
Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is widespread throughout the economy and lasts more than a few months.” The last time that happened was in early 2020, when the economy came to a sudden halt.
In the past century, we have seen more than a dozen recessions, some lasting up to a year and a half.
However, regardless of the country's economic situation, many Americans are struggling with skyrocketing prices for everyday goods, and most have exhausted their savings and are now relying on credit cards to make ends meet.
“Money is our top concern,” said Vishal Kapoor, senior vice president of products at Affirm. “Consumers are resilient but they are feeling the pressure of rising prices.”
Economists have been grappling with the problem of the growing gap between how the economy is performing and how people feel about their financial situation.
We are in a state of “vibration”.
“We are in a state of volatility,” Joyce Chang, JPMorgan’s global head of research, said at CNBC’s Financial Advisors Summit in May.
Over the past few years, “wealth creation has been concentrated among homeowners and high-income brackets, but you probably have about a third of the population that is excluded from that — that’s why there’s such a disconnect,” Chang said.
Rising rents, coupled with rising borrowing costs and low wage growth, have hit some people particularly hard. “Low-income households are not keeping up,” Goldman says. “Everything looks fine, but when you look beneath the surface, the gap between the rich and the not-so-rich is widening.”
It's not just “ambience”.
As more consumers seek to cover rising prices and interest rates, new signs of financial stress have emerged.
A growing number of borrowers are falling behind on their monthly credit card payments. Over the past year, about 9.1% of credit card balances have turned into delinquencies, according to the New York Federal Reserve’s second-quarter 2024 report. More middle-income households expect to struggle with debt repayments in the coming months.
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