The Blubber

Nearly three in five Americans mistakenly believe the US is in an economic recession, with the majority blaming the Biden administration, according to a Harris poll conducted exclusively for the Guardian. The survey revealed persistent pessimism about the economy as election day approaches.

The poll highlighted many misconceptions people have about the economy, including:

• 55% believe the economy is shrinking, and 56% think the US is experiencing a recession, even though the broadest measure of the economy, gross domestic product (GDP), has been growing.
• 49% believe the S&P 500 stock market index is down for the year, though the index increased about 24% in 2023 and is up more than 12% this year.
• 49% believe that unemployment is at a 50-year high, although the unemployment rate has been under 4%, a near 50-year low.

Many Americans place the blame on Biden for the state of the economy, with 58% of those polled saying the economy is worsening due to mismanagement from the presidential administration.

The poll underscored people’s complicated feelings about inflation. The vast majority of respondents, 72%, believe inflation is increasing. In reality, the rate of inflation has fallen sharply from its post-Covid peak of 9.1% and has been fluctuating between 3% and 4% a year.

In April, the inflation rate decreased from 3.5% to 3.4% – far from inflation’s 40-year peak of 9.1% in June 2022 – triggering a stock market rally that pushed the Dow Jones index to a record high.

A recession is generally defined by a decrease in economic activity, typically measured as gross domestic product (GDP), over two successive quarters, although in the US, the National Bureau of Economic Research (NBER) has the final say. US GDP has been rising over the last few years, barring a brief contraction in 2022, which the NBER did not consider a recession.

The only recent recession was in 2020, early in the Covid-19 pandemic. Since then, the US economy has grown considerably. Unemployment has hit historic lows, wages have been rising, and consumer spending has been strong.

However, the road to recovery has been bumpy, largely due to inflation and the Federal Reserve raising interest rates to control high prices.

Despite previously suggesting the Fed could start lowering rates this year, Fed officials have recently indicated that interest rates will remain elevated in the near future. While inflation has eased considerably since its peak in 2022, officials continue to say inflation remains high because it is above the Fed’s target of 2% a year.