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Here’s why 75% of likely voters think we’re in a recession — even though we probably aren’t

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CNN Business

A new CNN poll shows that three-quarters of likely voters feel the US economy is in a recession. It probably isn’t, but that’s beside the point.

The technical definition of a recession is two consecutive quarters of economic contraction, which the US economy experienced in the first half of the year. But this is America, and we do things differently from the rest of the world: Economists here accept that the United States is only in recession when some obscure, elite group of experts determines that activity economy has been in widespread and significant decline for more than a year. some months. It is difficult to assert that this happened, which we will explain below. And the US economy rebounded relatively well in the third quarter.

Still, the economy is feeling bad for the majority of Americans ahead of next week’s midterm elections. And for good reason.

Consumer prices have been skyrocketing for more than a year.

What started with supply chain bottlenecks caused by the global pandemic — and made worse by Russia’s war in Ukraine — has morphed into a larger problem, burdening Americans with higher costs. bred for everything from vegetables to vet bills.

The closely watched consumer price index, which measures inflation by looking at a basket of commonly purchased goods and services, hit a four-decade high of 9.1% in June. The latest reading shows that prices have cooled only slightly, at 8.2%. But it’s still the highest since the early 1980s, and it’s the first time many young people have experienced inflation.

“Inflation has kind of become like a cancer,” said Christopher S. Rupkey, chief economist at FwdBonds, in response to the September CPI report. “It’s spreading to services, where it’s going to be a lot more persistent, a lot more stubborn, a lot harder to get those prices down.”

The labor market is a beacon of hope in the US economy, with unemployment at its lowest level in half a century. And wages increase, on average, by more than 5%.

For workers looking for better pay or benefits, now is a great time to negotiate or try out a new position. For recruiters, it’s a different story.

There are almost two jobs available for every person looking for a job – that’s a bonus for job seekers, but a concern for the Federal Reserve, as it drives up inflation as bosses pay higher salaries to compete for talent.

And more good news is expected this week: the US economy continues to create jobs. The October jobs report, out Friday morning, is expected to show 200,000 jobs added last month, well above the pre-pandemic average.

Here’s why 75% of likely voters think we’re in a recession — even though we probably aren’t

Gasoline prices are notoriously volatile and tend to weigh heavily on voters’ minds, even though there is very little a politician can do to influence pump prices in any way. of another.

It’s been a dismal year, as U.S. gasoline prices soared to a record average of $5 a gallon over the summer. Since June, prices have fallen significantly, to around $3.78. But that drop might not be enough to buy Democrats the goodwill of voters, given the high costs of all other necessities.

Just a week before voters head to the polls, President Joe Biden on Monday sought to direct popular outrage against oil companies, whose jaw-dropping profits have sparked calls from some on the left for a tax exceptional.

“Today’s record profits are not because they are doing something new or innovative. Profits are a war bonanza,” Biden said. “Enough is enough.”

Here’s why 75% of likely voters think we’re in a recession — even though we probably aren’t

Food prices are hitting Americans hard, jumping 11.2% on the year to September. This is an even more penalizing increase than headline inflation. Restaurant prices rose 8.5% and grocery store prices climbed 13%.

But some supermarket essentials have risen again over the past year: eggs are up 30.5%, butter jumps 26.2% and flour prices are up 24.2%, according to data from the Bureau of Labor Statistics. A handful of grocery items, such as steaks and tomatoes, saw annual declines.

Several factors contributed to these higher costs, including the war in Ukraine, droughts and other extreme weather conditions, and a deadly bird flu that hit poultry stocks.

But that’s cold comfort to Americans who’ve had to change the way they eat, switch to private label, and cut spending to stay within their budget. And there might not be much holiday relief: A recent report by market research firm IRI estimated that a typical Thanksgiving meal will cost 13.5% more this year compared to Last year.

Here’s why 75% of likely voters think we’re in a recession — even though we probably aren’t

Buying a home is the most unaffordable since the mid-1980s.

Mortgage rates for a 30-year fixed rate hit 7% earlier this year, and home prices remain just below recent highs, shutting many potential buyers out of the market. Rents are cooling off from their peak, but are still up double-digit percentages from a year ago in many cities.

Inventory is still tight as homeowners who have locked in extremely low interest rates for the past two years by buying a home or refinancing are reluctant to give up their low monthly payments by moving. And that threatens to keep home prices out of reach for many Americans.

Here’s why 75% of likely voters think we’re in a recession — even though we probably aren’t

CNN Business’ Alicia Wallace, Anna Bahney and Danielle Wiener-Bronner contributed to this report.


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