The US Economic Unhappiness Index is at its highest. Despite the illusions we are entering a recession

The June Unhappiness Index (composed of unemployment and CPI inflation) rose to 12.5. This is the highest value since September 2011, when the US economy was experiencing a period of very weak employment and economic performance after the Great Recession. At the time, the yield curve was almost inverted and a new recession was feared.

The June Unhappiness Index is also higher than that of the 2007-2009 recession, when the index peaked at 11.4%. The index is also roughly equal to that of the 1990-1991 recession:

So even if the NBER, the US office for economic studies, has not yet commented on whether to apply the word "recession" to the current economy, it is clear that the economy is not in good shape. Call it recession or don't call it.

Although the White House is trying to convince voters that all is well, consumer sentiment suggests that ordinary people don't buy it. Furthermore, if we are trying to understand whether unemployment and inflation affect consumer sentiment or not, we need to look no further than the fact that the unhappiness index tracks consumer sentiment quite closely. If we reverse the Michigan Consumer Sentiment trend, which measures the mood of consumers, and combine it with the unhappiness index, we get this result:

Consumer sentiment has plummeted along with the rise in the unhappiness rate, as has often happened in recent decades. So, although many sources in the US continue to deny that there is a recession, and instead claim that everything is fine, everything is perfect, in reality it is not exactly like that, quite the contrary. Feeling is very negative.

After all, the bad news continues to accumulate. The Fed has long held on to job openings data in the JOLTS report, arguing that the economy must be growing because employment (a lagging indicator) suggests strength. Well, this morning's JOLTS report shows a clear turnaround from its upward push, with a month-over-month decline in job openings being the largest since the 2020 recession. they decreased by 9.8% compared to the peak in March.

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This is a machine translation of a post published on Scenari Economici at the URL on Fri, 05 Aug 2022 06:00:25 +0000.