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By most measures, the U.S. economy is doing well. And yet, many people would argue otherwise.
Roughly 3 in 5 Americans believe that the U.S. is currently in a recession, according to a new survey of 2,000 adults by Affirm.
Of those respondents, most said a recession started roughly 15 months ago, in March of last year, and could last until July of 2025, citing higher costs and more difficulty making ends meet, the San Francisco-based fintech company found in the June poll.
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Persistent inflation has weighed heavily on households, according to Vishal Kapoor, senior vice president of product at Affirm.
“With confidence in the U.S. economy at a low point, consumers are urgently seeking ways to feel in control of their finances,” he said.
According to a separate Guardian/Harris poll from May, 56% of respondents said they believe the U.S. is in a recession, although gross domestic product has been increasing for the past several years.
Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” There have been more than a dozen recessions in the last century, some lasting as long as a year and a half. The last official recession was in 2020, at the start of the Covid-19 pandemic.
But regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.
We’re in a ‘vibecession’
Economists have wrestled with the growing disconnect between how the economy is doing and how people feel about their financial standing.
We’re in a “vibecession,” Joyce Chang, JPMorgan’s chair of global research, said at the CNBC Financial Advisor Summit in May.
“If you’re a homeowner or if you own financial assets, you’ve done very well, but you’re leaving out huge segments of the population,” Chang said.
“The wealth creation was concentrated amongst homeowners and upper-income brackets, but you probably have about one-third of the population that’s been left out of that — that’s why there’s such a disconnect,” Chang said of the last few years.
As more of those households stretch to cover price increases and higher interest rates, there are new indications of financial strain.
A growing number of consumers are falling behind on their monthly credit card payments. Over the last year, roughly 8.9% of credit card balances transitioned into delinquency, the New York Fed reported in May.
And more middle-income households anticipate struggling with debt payments in the coming months.