The Perception of a Recession in the U.S. Economy

Despite positive indicators of economic growth in the United States, a significant portion of the population feels otherwise. According to a recent survey conducted by Affirm, nearly 3 out of 5 Americans believe that the country is currently experiencing a recession. This perception is fueled by factors such as increased costs of living and financial difficulties in making ends meet.

Interestingly, respondents in the survey pinpointed the start of this perceived recession to approximately 15 months ago, in March of the previous year. Furthermore, many predicted that this economic downturn could extend until July of 2025, indicating a significant lack of confidence in the current economic climate.

One of the key driving forces behind this negative perception is persistent inflation, which has placed a heavy burden on households across the country. Vishal Kapoor, Senior Vice President of Product at Affirm, highlighted the urgency with which consumers are seeking ways to regain control over their finances given the low levels of confidence in the U.S. economy.

The disconnect between economic data and public sentiment has been a subject of concern among economists. Joyce Chang, Chair of Global Research at JPMorgan, described the situation as a “vibecession,” pointing out that while certain segments of the population – including homeowners and those in upper-income brackets – have benefited from wealth creation, a significant portion of the population has been left behind.

As households grapple with rising prices and higher interest rates, the financial strain is becoming increasingly evident. More individuals are resorting to credit cards to cover their expenses, with a growing number falling behind on monthly payments. The New York Fed reported that approximately 8.9% of credit card balances transitioned into delinquency over the past year, signaling a concerning trend in household debt management.

The perception of a recession in the U.S. economy highlights the disconnect between objective economic data and the lived experiences of many Americans. While indicators of economic growth may appear positive on a macro level, the reality of financial hardship and strain faced by individuals and families paints a different picture. Addressing these discrepancies and finding ways to support those who are struggling financially will be crucial in navigating the current economic landscape.