Some Triangle residents believe the US economy is already in recession, despite economists claiming otherwise.
Garner shopper Paul Bischler listed several reasons why he believes in the former.
“Based on the prices I see in the supermarket, the gasoline prices [and] the mortgage rate now,” Bischler said. “They’re affecting me, both gas and food, as you can see, and two negative quarters of negative growth.”
On Friday, the Bureau of Labor Statistics released its latest employment and hiring data, showing that the U.S. economy added 528,000 jobs in July.
Inflation is at its highest level in more than 40 years. In addition, the economy has contracted for two quarters in a row, which is the usual – but informal – definition of a recession. It does not take into account several other factors that economists consider, such as the job picture.
Gerald Cohen, chief economist at the University of North Carolina at Chapel Hill Kenan-Flagler, said two negative quarters aren’t enough to offset the latest jobs report.
“I don’t think it will be called a recession, and I don’t believe it is a recession either,” Cohen said. “This suggests that the economy is growing again in [the third quarter].”
Cohen said the job market has now surpassed its pre-pandemic high and unemployment has fallen to its pre-pandemic low.
“We didn’t just see [a] number of healthy jobs of 528,000, but the previous months were again revised upwards,” said Cohen. “If we went into a recession, if the economy slowed down, you’d see the revision data is down.”
Garner shopper Brooklyn Blake agreed with Cohen about job creation.
“I mean, if you go around, there are ‘help wanted’ signs everywhere, so I believe on the work front,” Blake said.
UNC economist: ‘Can’t find signs of weakness’ in economy based on jobs report
WRAL News asked North Carolina State University economist Mike Walden that if we’re not in a recession, why do we keep talking about it?
“Obviously everything is getting politicized now, and of course the government wants to say we’re not in a recession,” Walden said. “And I would actually agree with them now.
“Government opponents want to say, ‘Well, we’ve got this, this rule of thumb, two consecutive quarters of negative GDP, so we’re in a recession.’ And that is the political angle.”
Unemployment fell to 3.5%, which corresponds to the more than 50-year low reached just before the pandemic broke out.
On Friday afternoon, President Joe Biden remarked, “There are more people working in America than at any time in American history.”
Biden attributed the job growth to his policies, even as he acknowledged the pain caused by inflation. He emphasized the addition of 642,000 manufacturing jobs to his watch.
“Instead of employees begging employers for work, we see employers competing for American workers,” Biden said.
Walden thinks inflation is pushing some people back into the labor market, which could help reduce the labor shortage.
“The only downside is that I think this gives the Federal Reserve more ammunition to raise interest rates,” Walden said.
At the end of July, the Federal Reserve raised its key rate to a range of 2.25% to 2.5%, the highest level since 2018.
Walden said he thinks inflation has probably already peaked and should slow down a bit.