OKLAHOMA CITY – Stephanie Bice, Oklahoma’s 5th District congresswoman, contends the U.S. is in a recession. But people who analyze the economy for a living contend the picture is murky.
Just three things are known for a certainty:
• Inflation is high, one of the highest rates in the last 40 years.
According to Paul Krugman, a 2008 winner of the Nobel Memorial Prize in Economic Sciences, underlying inflation remains high, “at least by the standards of the past 30 or so years.” There are many competing estimates of that underlying rate, he said, “but by and large they tend to be in the range of 4% to 5%.”
• Economic growth is slowing. Real gross domestic product decreased at an annual rate of 0.9% in the second quarter of 2022, according to an estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP decreased 1.6%.
• Unemployment is low; the labor market is surging. Unemployment numbers ticked up last week, but joblessness is still low.
The unemployment rate dipped to 3.5% last month, tying a 50-year low reached just before the coronavirus pandemic slammed the U.S. economy in early 2020. The U.S. Department of Labor reported recently that U.S. employers added 528,000 jobs in July, more than double what forecasters had expected.
A disconnect exists between job growth and economic growth, and it’s difficult to understand what’s happening with the economy.
“First we had a flat month for the Consumer Price Index: zero inflation in July. Then we saw an actual decline in the Producer Price Index,” Krugman wrote.
“Until July, headline rates were more or less consistently running well above core inflation; now, with gasoline prices falling, supply chain problems easing and so on, we’re seeing that difference reverse itself,” wrote Krugman, who earned a bachelor’s degree in economics at Princeton University, a Ph.D. in economics at the Massachusetts Institute of Technology, and previously was a professor of economics at the Massachusetts Institute of Technology. “The result is likely to be several months, at least, of fairly low inflation.”