Story of the Week •
August 10th, 2023
Are We Still Expecting a Recession?
DAVID ZALUBOWSKI/ASSOCIATED PRESS
What is the state of the United States economy? Does a recession still loom on the horizon? Are the Federal Reserve's efforts to fight inflation working?
Here's a roundup of recent economic news and forecasts.
Jobs: In July, the U.S. economy added 187,000 jobs, and unemployment dropped to 3.5%, according to data from the U.S. Bureau of Labor Statistics. The job growth fell below expectations but was still deemed a positive sign, with outlets noting that unemployment is near a 50-year low. Health care, social services, financial activities, and hospitality experienced the most growth.
Wages: In late July, the Bureau of Labor Statistics released data on second-quarter 2023 worker wage growth, revealing civilian worker wages grew 1% during the quarter. This was a drop from the 1.2% wage growth workers experienced in the first quarter. This data was deemed bad news for workers but good news for the economy, indicating the Federal Reserve's efforts to slow economic growth to fight inflation are working.
Inflation: Speaking of inflation, it rose 0.2% on a monthly basis in July and 3.2% annually, a slight uptick from the 3% annual inflation recorded in June. This 3.2% figure broke a 12-month trend of falling inflation rates. Comparing prices to one year ago, shelter, food, and core prices are up, while energy and used vehicle prices are down.
GDP: Overall, the U.S. gross domestic product (GDP) beat expectations in the second quarter of 2023, growing 2.4%. This was framed as good news across the spectrum, but it did not quell recession fears from some economic analysts.
Credit Rating: Despite a growing economy, political turmoil led Fitch Ratings, one of the “Big Three” credit rating agencies, to downgrade its rating of U.S.-issued debt from AAA to AA+. Fitch cited Washington's debt-ceiling standoff in May as an indication of an "erosion of governance." The downgrade was refuted and dismissed by both the White House and Treasury Secretary Janet Yellen.
How the Media Covered It: Economic optimism has grown across the spectrum, but there remain skeptics on both sides of the aisle. Left-rated voices have been quicker to determine recession fears are no longer necessary. On the right, negative economic reporting typically leans heavily on the term 'Bidenomics,' deeming the White House out-of-touch for praising the economy while workers still feel the negative impacts of inflation.
More from AllSides
- Fact Checks: Did Putin ban 5G? Is Biden involved in the Trump indictment? We broke down the biggest claims and fact checks of the past week.
- Do you trust the media? A new report from Reuters (Center bias) found only 32% of Americans trust the news. We broke down the data.
- Opinion from the Center: "Since it appears that a judge and jury will not derail Trump from his current path to the nomination, the task falls to the candidates running against him."
Snippets from the Center
JPMorgan backs off recession call even with ‘very elevated’ risks
CNBC
"While noting that risks are still high and growth ahead is likely to be slow, the bank’s forecasters think the data flow indicates a soft landing is possible. That comes despite a series of interest rate hikes enacted with the express intent of slowing the economy, and several other substantial headwinds."
How much pain could commercial real estate heap on U.S. banks and the economy? A lot.
MarketWatch (opinion)
"The signs of commercial real estate distress are already visible, especially in the office sector. In the first quarter of 2023, the office vacancy rate reached 18.6%, 5.5% higher than it did in first quarter 2020 when the pandemic began. This is a larger trough-to-peak increase than the 4.6% increase during the Great Recession."
Snippets from the Left
The US Economy Is Great. Stop Worrying About It.
Bloomberg (opinion)
"To be sure, matters are hardly perfect. The number of job openings has been falling, banks still have problems with non-performing commercial loans, and inflation is still too high, among other problems. Nonetheless, especially considering what could have happened after a pandemic that killed well over 1 million Americans, the US economy seems unreal, in the best sense of that term."
The case for a soft landing in the economy just got another boost
NPR (analysis)
"Here's another bit of positive news: Wages are finally outpacing inflation, boosting workers' buying power. Average wages in July were up 4.4% from a year ago. Wage gains have moderated in the last year, but inflation has cooled as well, so workers' paychecks now stretch farther. For the twelve months ending in June wages rose 4.4%, while prices climbed just 3%."
Snippets from the Right
The reality of Bidenomics is that nothing is better
Washington Examiner (opinion)
"Biden seems exquisitely out of touch with the hurt people are feeling — so much so that he is spending the next few days campaigning on how his policies are making a strong economy. When filling your gas tank costs more than $75, it's not hard to understand why recent polling has shown voters are saying no thanks to Bidenomics."
‘Bidenomics’ Backfires
Noah Rothman (opinion)
"The Biden White House has giftwrapped for the GOP a message it would otherwise have had to craft and popularize on its own. Will the economy improve over the next 14 months? Probably. Will it improve to the point that voters’ impressions of it go from bad to good by the time early voting in the 2024 race begins? That seems less likely. Good luck, Mr. President."
