Struggling Americans Feel the Economy Is in a ‘Silent Recession,’ Bankrate Says

A cashier rings up products at a supermarket ahead of the Thanksgiving holiday in Chicago, Ill., on Nov. 22, 2022. REUTERS/Jim Vondruska

Despite strong economic growth and a robust labor market, most Americans say the U.S. economy is in a downturn, and many are calling it a “silent recession,” according to a new survey from Bankrate.

Fifty-nine percent of adults feel like the country is currently in a recession. This bearish view of the current economic conditions was universal regardless of age, gender, race, and income. Bankrate noted that the number of low-income households and those earning $100,000 or more per year who think the economy is in a recession was identical.

Most respondents (66 percent) said the present economic climate “has negatively impacted my finances this year,” and half of surveyed Americans reported that their overall financial situation is worse today than it was three years ago.

The culprit? Inflation.

According to the Bankrate poll, 81 percent did not boost their emergency savings because of various economic factors, including price pressures, higher borrowing costs, and changes to their employment status.

Since 2021, cumulative inflation has been more than 17 percent, meaning that a family of four is paying roughly $15,000 more per year. But there is hope among the public as the University of Michigan’s one-year-ahead inflation expectations cratered in December to 3.1 percent, down from 4.5 percent in November.

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Still, until deflationary relief travels across the marketplace, many Americans are struggling to save for a rainy day.

The Bankrate poll revealed that nearly one-third (32 percent) say they have fewer emergency savings today than at the beginning of 2023. Additionally, one-fifth did not have any savings at the start of the year and still did not have any to close out the year.

In October, the Bureau of Economic Analysis (BEA) reported that the personal savings rate was 3.8 percent in October, far below the long-term average of 8.5 percent. Over the past year, a hefty supply of studies has shown that many U.S. adults possess little or no emergency savings.

Because of the higher cost of living, many individuals are taking on more expensive debt. In the third quarter, household debt hit an all-time high of more than $17 trillion, with credit card debt also touching a record high of $1 trillion, Federal Reserve Bank of New York data show.

Silent Recession

White House officials and many economists have disagreed with the sentiment shared by many that the economy is in a recession.

The standard definition has been two consecutive quarters of negative GDP growth, which was recorded in the first half of 2022.

However, there has been a divergence between what most Americans feel and what academics say.

“Most Americans aren’t looking at the economy in terms of the definition of recession that economists or business leaders would use,” said Mark Hamrick, the senior economist analyst at Bankrate. “They look at the performance of the economy as they perceive it relative to their own personal situations.”

Some experts state that a new term is floating around social media: silent recession. Google searches for this term have risen over the last 12 months as more people struggle to keep their heads above water.

TikTokers are going as far as claiming the nation is in a “silent depression.”

A chorus of Wall Street analysts agree with what people are experiencing on Main Street.

“While government statistics may present a picture of prosperity and growth, the personal experiences of ordinary citizens and the private sector tell a different story,” wrote Kevin Sanford, a financial research analyst at Stansberry Research, in June. “This disconnect between official data and the actual experiences of ‘Main Street’ has sparked a growing debate about the true state of our economy.”

With negative opinions about the economy, the polling data confirm that most Americans disapprove of President Joe Biden’s economic agenda, better known as “Bidenomics.”

A recent Financial Times-Michigan Ross survey found that only 14 percent of U.S. voters say Biden’s policies have made them better off.

In addition, a new CNN poll conducted by SSRS learned that President Biden’s job approval rating stands at 37 percent as economic concerns continue to be the chief concern among Americans.

After the better-than-expected November jobs report, President Biden touted his economic record, claiming that more than 14 million jobs have been created since he took office and that inflation has fallen by two-thirds.

“Workers’ paychecks and household wealth are higher now than they were before the pandemic, after adjusting for inflation,” President Biden said in a statement. “On my watch, we have achieved better growth and lower inflation than any other advanced country. A year ago, forecasters said it couldn’t be done.”

BLS data show that real average hourly and weekly earnings are down 3.24 percent and 4 percent, respectively.

The Fed’s triennial Survey of Consumer Finances published in October showed that net worth soared to an all-time high by 37 percent after inflation, driven by pandemic-era government stimulus and easy money policies that led to higher house and stock prices.