What’s Going on With the Economy?

Have you ever felt like the economy’s pulse doesn’t quite match the rhythm of the headlines? You’re not alone in this economic conundrum. There’s a noticeable divide between the complex data and the “vibes” many Americans are experiencing. Let’s dive into this perplexing scenario.

The State of the Economy: Data vs. Perception

On paper, the U.S. economy paints a relatively optimistic picture. Recent job growth figures are robust, with 336,000 jobs added in September, a significant leap from the previous months ². Manufacturing, initially sluggish, is now showing signs of revival ³. Consumer spending remains robust, defying analysts’ slowdown expectations ². Even the forecasts for Q3 economic growth are surprisingly upbeat ⁴.

Understanding the Mismatch

But why is there a disconnect between data and sentiment? Part of the answer lies in our inherent negative bias, where our brains are more attuned to bad news. Personal experiences, like job losses or observing others’ struggles, also color our economic outlook. The lingering effects of the pandemic continue to cast long shadows in “uncharted waters,” adding to the uncertainty.

Potential Economic Challenges

Despite the positive indicators, challenges loom on the horizon. The geopolitical unrest in Israel and Ukraine is a source of global anxiety ⁵. The dwindling of excess savings accumulated during the pandemic could curb future spending ⁵. The full impact of high interest rates is yet to be fully realized, and there’s an uptick in late loan payments among subprime borrowers ⁶.

In essence, while the U.S. economy shows resilience in data, it’s understandable if the public sentiment doesn’t align. The key lies in staying adaptable and making decisions based on confidence, not fear. At Semmax, we’re keeping a close eye on these developments and will keep you informed.

Sources:

1. https://www.wsj.com/economy/a-recession-is-no-longer-the-consensus-3ad0c3a3
2. https://www.wsj.com/economy/the-economy-was-supposed-to-slow-by-now-instead-its-revving-up-3c0f7a2e
3. https://www.federalreserve.gov/releases/g17/current/default.htm
4. https://www.atlantafed.org/cqer/research/gdpnow
5. https://www.frbsf.org/economic-research/publications/economic-letter/2023/may/rise-and-fall-of-pandemic-excess-savings/
6. https://www.wsj.com/economy/a-recession-is-no-longer-the-consensus-3ad0c3a3

Chart Source: https://www.wsj.com/economy/a-recession-is-no-longer-the-consensus-3ad0c3a3

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