A new survey has found that 4 in 5 Americans expect a recession this year, despite unemployment remaining low, retail sales increasing, and gross domestic product showing growth.
The survey, conducted by CNBC and Momentive, found that 81% of adults think a recession is likely in 2022 when asked at the end of March.
This fear continues to grow in the nation, even with several metrics — like jobs returning and wages increasing — showing the U.S. economy is continuing to remain in a healthy place.
Nick Bunker, an economic research director for North America at the Indeed Hiring Lab, shared with CNBC that looking at the labor market alone makes it hard to argue we are seeing a recession.
"If you look at the labor market data right now, you'd be hard-pressed to find any indication of recession," Bunker said. "Maybe a relative slowdown, but that's from really hot to just hot."
An economist who works with UCLA's Anderson Forecast, David Shulman, shared with the LA Times what exactly is going on.
"People are trying to talk themselves into a recession right now," Shulman said.
While it appears that most Americans expect a recession to happen in 2022, Shulman doesn't see the real trouble popping up until 2024. The main factor Shulman pointed to was the rapid acceleration in inflation that could cause a downturn.
Still, certain groups appear to be more worried about the economy crashing than others, as the survey found Republicans think a recession is more likely than Democrats. Republicans were also more likely to share that they believe they are financially worse off this year than they were last year.
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But what defines a recession?
According to the National Bureau of Economic Research, a recession is defined as a "significant decline in economic activity that is spread across the economy and that lasts more than a few months."
This would mean that the GDP would need to decline for two consecutive three-month periods after taking into account inflation.
In more layman's terms, a recession is a surge in unemployment as demand for goods and services drops. This, in turn, forces businesses to reduce their staff and causes even lower demand for goods and services.
When was the last time this happened?
The last time that the GDP saw a six-month stretch of decline was in 2020, when the COVID-19 pandemic began and shut down economies across the globe, according to CNBC.
So while there doesn't appear to be a sign of recession happening this year, according to economists and Shulman, there is a psychological dimension where consumers lose their confidence in the economy, so they begin to curb their spending.
The Conference Board's survey of consumer confidence says that this is happening right now. The agency found that the public continues to grow more skeptical about the future, even though some feel better about where they are at right now.
Shulman says that the four-decade-high inflation rate is to blame for this poor opinion of the economy, as it's hard to feel good about a rising grocery and gas bill.
"When you see $6 for gasoline, you feel poor," Shulman told the Times. "In some people's minds, that's a recession."
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