Mong the noneconomists I’ve recently interacted with, there is a lot of confusion and uncertainty about how the economy’s doing and where it is heading. Among economists, it’s pretty much the same. Some of them are predicting a recession starting later this year. Others are predicting a soft landing or a “slowcession,” when economic growth “comes to a near standstill but never slips into reverse,” as Scott Hoyt, a senior director at Moody’s Analytics, describes it.
The world economy is still emerging from an unprecedented pandemic, Europe is experiencing its biggest war since 1945, and many countries have been recording inflation rates not seen in thirty years, so it’s hardly surprising that the economic picture is blurred. Since the coronavirus started to spread, in 2020, some long-standing economic relationships have broken down. Other, new trends have emerged, and they could turn out to be temporary. But, in looking through this haze of conflicting data, two things stand out.
The first is that, while higher inflation has raised the cost of living significantly in the past couple of years, the U.S. economy has made an impressive recovery from the pandemic in terms of output and jobs. On Thursday, the Department of Commerce reported that inflation-adjusted G.D.P. rose at an annualized rate of 2.9 per cent in the third quarter of last year. In 2022 as a whole, growth came in at 2.1 per cent, down from a bumper 5.9 per cent in 2021, but still well above the average growth rate from 2001 to 2020, which was about 1.7 per cent. If one considers G.D.P. levels rather than growth rates, the economy is now almost back on the trend line that it was on before the pandemic. And the unemployment rate, at 3.5 per cent, is back to its pre-pandemic February, 2020 level, which was the lowest level in half a century. These outcomes are much better than many economists and policymakers had expected during 2020. In fact, as the Washington Post’s Heather Long pointed out, to “recover all jobs and output in basically 2 years is remarkable.”
It’s easy to forget now that, between April and June of 2020, the unemployment rate surged into the double digits. At that point, it seemed possible that a vicious cycle would kick in—rising joblessness would lead to falling incomes over all, falling incomes would result in less spending, which in turn would lead to more job losses (as the demand for goods and services went down). That this didn’t happen is testament partly to the rapid reopening of parts of the economy after the initial shutdowns and to three big stimulus packages that Congress passed in 2020 and 2021, which together provided roughly four trillion dollars in financial support for households, businesses, and local governments.
Felecia Phillips Ollie DD (h.c.) is the inspiring leader and founder of The Equality Network LLC (TEN). With a background in coaching, travel, and a career in news, Felecia brings a unique perspective to promoting diversity and inclusion. Holding a Bachelor’s Degree in English/Communications, she is passionate about creating a more inclusive future. From graduating from Mississippi Valley State University to leading initiatives like the Washington State Department of Ecology’s Equal Employment Opportunity Program, Felecia is dedicated to making a positive impact. Join her journey on our blog as she shares insights and leads the charge for equity through The Equality Network.
