A shorter version of this commentary appeared in Barron’s magazine, June 8, 2022. For a video interview, see BNN/Bloomberg, June 8.
June 9, 2022 — US consumer sentiment, by one measure, is at its lowest level since 2011. More Americans say they hear mostly negative news about the economy than hear positive news, or a balance of positive and negative. Most remarkably, 57% tell pollsters they believe we are currently in recession versus only 21% who do not.
So, is the US economy already in a recession? No. People are unhappy with inflation, which has recently been running 8.3 % [CPI change, from April 2021 to April 2022]. That is the highest since 1982. But inflation is not recession. Recession is defined as a significant decline in economic activity. Economic activity is not falling. Quite the contrary: it has been booming. It is worth spelling out the evidence.