Is the US in recession?

It often seems that economists are perpetually warning us about the next U.S. recession. One influential analyst says an economic slowdown is already a fact of life for many Americans.

Twenty-two states are “now experiencing persistent economic weakness and job losses that are likely to continue," said Mark Zandi, the chief economist at Moody’s Analytics, to MarketWatch. The overall American economy is “on the precipice. Government data released before the shutdown showed the “broader economy was in pretty good shape,” said MarketWatch, but some are skeptical. The gross domestic product might be rising, said Zandi, but the “job market is weaker.”

Other observers are warning of a bifurcated “K-shaped economy,” said CNBC. Wealthy Americans are “engaging their purchasing power,” but lower- and middle-class consumers are struggling with “rising costs on daily essentials like groceries and gas.” Meanwhile, “unofficial signals” like rises in missed car payments and women leaving the workforce are offering “early warning signs about what is to come,” said Quartz.

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What did the commentators say?

“This moment feels much like late 2007 and early 2008,” said Ball State University economics professor Michael J. Hicks at The Indianapolis Star. For a time during that period, the economy felt stable “even as we entered recession.” Today is similar. While the gross domestic product is still rising, driven by the AI boom, “nearly every other measure of economic activity has stagnated or is in deep decline.” The United States may already be in recession. But “we don’t feel it yet.”

The U.S. economy is in a “weird place right now,” said economist Paul Krugman at his newsletter. Policymakers are “flying blind” because of the government shutdown and unemployment is “relatively low by historical standards.” And Americans “feel very bad about the economy,” with consumer sentiment surveys rivaling the lows of the Great Recession. One problem is that President Donald Trump’s “wildly erratic policies” are creating “huge uncertainty” for businesses and consumers. We may not be in a recession yet, but the “frozen state of the U.S. economy has already made life much worse for many workers.”

What next?

The government shutdown is “complicating the Fed’s ability to help the economy,” said CNN. The Federal Reserve “relies heavily on official economic statistics” from the government to make decisions about interest rates to help goose or slow down the American economy, but the shutdown has “effectively cut off access to that data.” The available information is not great, though, with August data showing the “weakest pace of hiring since 2010.” The Fed is expected to announce its latest policies at a meeting on Oct. 29.

Americans are not happy with all of this. A new poll from the Public Religion Research Institute shows that most voters — including nearly 30% of Republicans — gave the president “low marks on the economy,” said Axios. That dissatisfaction could “test the durability of Trump’s support.”