Every week, there is a lot of contradictory news about the economy. A series of economic reports showed that the US economy shows remarkable resilience despite the recession talk.
The economy is strong. It comes with a lot of caveats.
These are just ingredients in a murky soup of conflicting yes, but headlines.
Consumers feel that they are lousy about the economy. Over the Thanksgiving weekend, a record 196 million Americans went shopping, and the roaring sales numbers weren't just because inflation had pushed prices higher, but also because people were making more transactions, according to Adobe Analytics.
Curtis Dubay, chief economist at the US Chamber of Commerce, calls this second-hand pessimism and says the economy might not be doing as poorly as you think.
Inflation is at near 40 years highs and is biting into family budgets. Americans are booking air travel and going to Disney parks in near-record numbers, even with higher park prices.
The labor market is incredibly strong again, as Federal Reserve Chairman Jerome Powell said on Wednesday that economists are worried about a recession, but the job market is incredibly tight, with more than 10 million open jobs and 1.7 jobs available for anyone who is looking for one or more jobs. It is too great, in a way, because it is going to add to inflation. No one knows what will happen next. Forecasts were notoriously unreliable in the post-Covid economy. The Fed has tried to contain the highest inflation since the 1980s, jacking up interest rates six times this year and even rolling out a bumper three-quarter hike not once but four times in a row.
The economy will not be affected by that next year, as tightening continues to work its way through the economy.
The household finances are in a better shape to handle it, with an excess $1.7 trillion in savings as a cushion, although people will likely have to dip into more of their savings.
While the housing market may be cooling, it is not crashing. After a very strong 2021, the sector is readjusting, recalibrating, said Bess Freedman, CEO of Brown Harris Stevens, on CNN's Early Start. Covid broke the economy and putting it back together has been hard to measure. Hundreds of millions of jobs were lost overnight. More than a million people were lost, schools closed, factories shuttered, and more than a million were lost. More than two years later, we are still struggling to gauge the strength and durability of the recovery.