Is the U.S. in recession? No, but recent research shows that most Americans seem to think so.
Despite the latest data indicating the country’s economy is going strong, a new survey from Talker Research and Affirm found that 3 in 5 Americans believe we’re in a recession. On average, respondents have held this belief since March of 2023 and anticipate holding it until July of 2025.
A recession is characterized by an economic slowdown and can be caused by various factors such as supply and demand shifts, job loss, decreases in spending, and stock market declines. It’s also believed to be directly linked to inflation since the government usually tries to curb inflation by reducing economic activity. A recession only occurs after inflation if that slowdown escalates.
Recent numbers from the Department of Labor do show a rising unemployment rate, but wages and job growth are also increasing. In terms of inflation, the U.S. Consumer Price Index, the government’s primary measure of inflation, decreased by 0.1% in June compared to the previous month. However, the overall rate still exceeds 3%, which is nearly a percentage point higher than economists would prefer.
This could be why 68% of respondents in the Affirm survey cited inflation and the increasing cost of living as the primary reasons for their belief that the U.S. is in a recession. Additionally, 7 out of 10 mentioned that the current inflation rate is impacting their financial plans for the future.
RELATED STORY | Inflation subsides as incomes more than keep up with rising cost of living, government data says
Other factors influencing respondents’ economic beliefs were the financial complaints reported by 50% from friends and family, 36% noticing loved ones reducing spending, and 20% struggling to pay off credit card debt.
Data from the National Bureau of Economic Research shows that the average recession since World War II only lasted for 10 months. However, the country has experienced recessions ranging from two months, like in 2020, to 18 months, as in 2007. This data indicates that the respondents’ assumption of this “recession” lasting 15 to 29 months is on the higher end of the scale.
To alleviate public concerns, an executive from Affirm mentioned the importance of managing finances with “greater choice and transparency.” 89% of respondents agreed that a monthly budget helped in managing finances, and transparency involved knowing the full price of an item, including taxes and fees, before making a purchase.
