Americans are still feeling the effects of a weakened economy, but some have started to find hope again. Though there’s been an improvement in recent months and years since COVID-19 hit American shores, many people express pessimism regarding the economy.
A Gallup survey showed that public confidence had reached its lowest point in over 13 years. The last time similar sentiments were echoed was during the end of The Great Recession, when people lost faith not only with their financial situation, but all aspects related to business and politics as well.
“Low unemployment is a rare bright spot,” noted Gallup. “But employers are still struggling to find workers to fill needed jobs, which is contributing to ongoing chain problems.”
The hiking interest rate and increasing commodity prices are the products of Russia’s invasion into Ukraine. Additionally, economic activities contracted three months into 2022 with imports rising while exports fall; leading to a more pessimistic outlook for the future.
The odds of a recession have been 30% according to some Moody’s Analytics and Wall Street Journal economists amid the increasing concerns. Peter Boockvar, the chief investment officer of the advisory firm The Bleakley Group, echoed a different sentiment with the focus on the consumer.
“In the debate over recession, no recession/soft landing, hard landing, it all comes down to the behavior of the U.S. consumer,” said Boockvar. “Lower-income households will certainly be most impacted by the direction of real wages, while upper ones will most likely be influenced by the direction of the stock market from here. Those in the middle will get impacted by both.”
“Inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending.”
With inflation still high and a major cashmere producing country entering an economic crisis, it’s hard to see how consumers will be able maintain their optimism for the foreseeable future. U.S. Economist Mahir Rasheed from Oxford economics believes the pessimism will remain until price pressures ease in late 2022 and early 2023. On the other hand, David Kelly of JPMorgan Asset Management expects inflation will slow its current annualized rate from 8% to 4% by the fourth quarter.