Americans’ confidence in the economy is wavering. After three consecutive months of growing consumer confidence, The Conference Board’s index took a hit in February.
Economists all over the map continue to point out that the U.S. economy is very strong right now. They can’t quite put a finger on why many Americans don’t feel the same way.
Terms like “vibecession” and the “silent recession” are making the rounds, where people report feeling like they’re living in a downturn even though the data points to an upswing. While price hikes are slowing, this latest consumer confidence survey shows people are currently worried about the job market and the political environment.
There are main economic indicators people see reports on every month, like the upcoming inflation report or the monthly jobs report. But to better understand the bad vibes around this economy, some study lesser-known data points that paint a more timely picture.
In an interview with former Federal Reserve adviser Danielle DiMartino Booth, she highlights some of the tea leaves she reads that are showing cracks in the economy, particularly in the labor market and with consumer spending. DiMartino Booth is the CEO and chief strategist of QI Research.
“Watch what companies do, not what the government says that they’re doing, because there seems to be such a big disparity in between the two that I think a lot of Americans have picked up on,” DiMartino Booth said.
For her part, she said she’s tracking Worker Adjustment and Retraining Notifications (WARN), which stems from a law requiring larger companies to notify states of upcoming mass layoffs.
Because many large companies offer generous severance packages, she said these layoffs are slow to show up on initial jobless claims. But that doesn’t mean they aren’t happening.
“We are indeed seeing these layoffs at the highest levels that we’ve seen since 2009, which was when the U.S. economy was in a pretty deep recession,” DiMartino Booth said. “You really do have to follow what’s happening in real time these days in order to get a better feel for what’s happening in the job market, which right now we’re seeing at recessionary levels.”
DiMartino Booth is also looking at consumer packaged goods (CPG), which are items that people regularly buy and use that require replacement, like food, makeup and household products. McKinsey & Company said CPG volume declined 2% to 4% on average in 2023, which it characterized as dramatic.
“Despite a relatively strong economy and low unemployment, consumers are buying fewer items – and spending more to do so,” McKinsey said.
“When you see good news out of Walmart, listen closely to what management is saying,” DiMartino Booth said. “Walmart is cannibalizing the sales of other retailers.”
Walmart continues to see customer boosts as more affluent people “trade down” to Walmart prices.
In a Forbes survey at the end of 2023, less than a third of respondents said their income exceeds expenses enough to live comfortably. Forty-one percent reported living paycheck to paycheck, while 29% said they don’t make enough to cover standard expenses.