Going into Tuesday's State of the Union address, President Joe Biden sees a nation with its future aglow.
One group of experts can read the data and claim a recession is on the horizon. A different group can focus on a separate set of figures and see reason to rejoice. It's a disorienting moment.
Zandi said he expects the U.S. economy will “skirt” a recession this year, though many economists believe a downturn will come. Only 24% of adults call the national economy good and 76% say conditions are poor, according to a poll by The Associated Press-NORC Center for Public Affairs Research. At the same time, 57% say their personal financial situation is good. That’s unchanged since December, but it has eroded slightly since earlier last year when 62% felt positively about their finances.
The past year's rate jumps produced a sudden whiplash. The stock market fell. Prominent tech companies such as Google and Microsoft recently announced layoffs. Even as computer chip companies began building new plants and crediting Biden's policies, the world economy swung from a dearth of semiconductors to a glut. Mortgage rates initially doubled to over 7%, before falling back a bit to 6% last week.
Carl Tannenbaum, chief economist for Northern Trust, said he is surprised that the rate increases have hit housing but not employment. Traditional models assumed that efforts to lower inflation would automatically include job losses. But when he talks to companies, most are reluctant to fire their workers because businesses had trouble finding skilled employees during the pandemic.
When the pandemic hit in 2020, the government aid was so overwhelming that a financial market crash turned into a rally. Biden tried to assure the country in 2021 that rising prices were a temporary inconvenience, only to find that inflation defined how many perceived his first two years as president.
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