I have spent the last few years gently admonishing the people in my life that, despite their economic turmoil, we not recession. Yes, the prices are high, but so are the workers’ wages – and sticker shock hasn’t stopped consumers from spending a ton. Blue-collar workers in particular have seen solid gains, and despite the recession, the unemployment rate for educated workers remains low.
But lately it has become more and more difficult to paint such a beautiful picture. The economy is not bad, but the overall situation is getting worse. As the inflation rate has dropped, the prices in 2019 are not coming back. The Federal Reserve will start cutting interest rates soon and provide relief, but if you’re thinking about buying a new home or car, you’re probably better off waiting. The same goes for changing jobs – depending on the state of the labor market, it’s better to stay where you are, especially for the white crowd.
For months and months it feels like another shoe in the economy is about to drop. I mean, in October 2022, the Bloomberg economic model said there was a 100% chance of a recession next year. Recession didn’t happen, but vibecession did. Right now, the economic indicators are not glowing red, but they are glowing green. We are in a wait-and-see mode.
“There’s collective breathing,” says Allison Shrivastava, an economist at Kannete. “Are we going to stick around to get there, or are things going to continue to decline? We were expecting a cool labor market — that’s kind of the goal — and it always is, you know. How right?”
The uncertainty in the economy is troubling, and it is being increased by the upcoming elections.
“We have a lot of consumers who tell us they’re reserving judgment about what’s going on until the election is resolved,” said Joanne Hsu, director of consumer research at the University of Michigan. “They keep saying there’s no way to tell.”
“It’s over” has become an internet meme as of late. It indicates a low turn of events, things not going your way – as opposed to “we’re back,” when things are on the upswing. That being said, when it comes to the labor market… it’s basically gone. The job growth that the US was seeing in 2021 and 2022 was well in the past, and there are clear signs of slowing.
The economy added 142,000 jobs in August, and the unemployment rate fell slightly, to 4.2%. That’s an improvement over July’s 4.3% unemployment rate, but overall, the US job market is slowing. Job openings in July were back to 2021 levels. Hiring and exit rates rose for the month, but are back to pre-pandemic levels, although layoffs remain low. What this means is that if you have a job, you can hold on to it, but if you want to leave or are unemployed and looking for a job, you may be in for a tough time.
Much of this is to be expected – part of the reason the Fed raised interest rates was to slow the economy, including the labor market. It is not reasonable to expect that the economy will increase jobs at the time it was because of this epidemic.
“If you think of the labor market as a bathtub, the bathtub is full,” said Dana Peterson, chief economist at the Conference Board. “So you don’t have to run the water, you don’t have to run the pumps hard anymore.”
However, the end of the party is never very happy. Now, even the mere knowledge that the labor market is in a state of instability causes anxiety – average monthly wages are constantly falling, and it is not known what will stop the drop. Another story varies by sector – if you work in technology, it can be a more difficult time to find a job than if you were looking for something in health or construction.
Even the mere knowledge that the labor market is in an unstable state causes anxiety.
Some workers feel like they missed the boat on the whole jump job a few years ago, and now it seems like the opportunity to participate has passed. Despite the strong labor market, they send endless CVs to the ether without a bite, and they don’t understand why. Jaime-Alexis Fowler, founder of Empower Work, a nonprofit that provides a hotline for workers, said she’s heard a lot of frustration from workers who want good jobs but can’t find them. This has led some of them to fall prey to fraud and has fueled resentment among those who are self-employed but want to work from home.
“People felt like there was a disconnect between their direct experience and what they felt was happening in the economy,” he said. “And so it felt like there was something wrong with them. ‘I can’t hear.’
For many people, the current environment feels a little blech. There are many unknowns that make it difficult to determine the right course of action.
Do I buy a home now and pay a higher mortgage rate, or do I wait and risk home prices rising even more six months from now? Do I try to quit this stupid job, or do I stick with it because at least the higher ups will suffer a little before they fire me? Do I hire a new person for my small business or do I keep working as is? Is this a stock market dip that I should buy, or should I continue to wait because The Big One is coming? Or maybe I should buy and sell randomly, because it’s all kind of casino though, that’s fine?
Hsu said consumer sentiment is better than it was in 2022, but still below the historical average. There are also deep differences in how different groups view the economy.
“People at the bottom of the income distribution don’t feel better than they did two years ago, while people with higher incomes and wealthier people feel better,” Hsu said. very much.”
Although the labor market is not in their favor, those at the top of the income distribution are enjoying recent gains in the real estate market and appreciation in their home values. On the other hand, those at the bottom do not benefit from what happens in the markets, and high house prices make them poor, because they are renters.
Productivity growth is a marathon. Vibes are a speed bump.
Some economic methods are good in the long run and do not give immediate results. Michael Madowitz, chief economist at the Roosevelt Institute, a progressive think tank, pointed out that labor productivity — an economic measure of how much workers produce in the hours they work — is a which makes economists happy. but not necessarily productive workers. “Manufacturing growth is a marathon,” he said. “Vibes are a speed bump.”
Uncertainty about the outcome of the 2024 election really hangs over everything. Hsu said consumers include those who expect to win the election in their views on the economy. If candidate X comes out on top in November, some will say things will be good, and others will say things will be bad; if Y comes out first, they will cheat. The race is very tight, increasing uncertainty and instability in the economy. Although the election will not immediately change the state of the country’s economy, it will change the way people feel about it.
“The lower interest rates go through the election, the more likely people will feel better,” Peterson said. (Unless we have a 2020-esque situation where we don’t know the results for days and one of the candidates refuses to accept the results.)
Not to sound like a broken record here, but the economy is good. The labor market is good, if a little sluggish. Consumer spending is strong, and wages are higher than they were before the pandemic. GDP growth may be slowing, but it doesn’t look like it will fall into recession anytime soon. There are reasons to be concerned – the pandemic is over, and credit card fraud is on the rise – but there is no need to declare a crisis.
Things are slowing down, and after a few years of momentum, that scares people. Even a small breakdown is not pleasant for everyone, and for some people, it can be painful. We are always in trouble, and that limbo is not a pleasant place to be.
Emily Stewart is a senior reporter for Business Insider, covering business and economics.