We’re just over halfway through 2023 and it’s been a roller coaster year. There has been a trio of banks collapsing and a close call with a debt limit catastrophe. The stock market has somehow been steady. Inflation is coming down (but not as much as many of us would like). The unemployment rate is low and the job market is strong. Yet it seems like there’s a new round of mass layoffs every couple of weeks. It’s all been a lot to deal with and longtime CNN and PBS News House journalist Catherine Rampell is asking the question that all of us are wondering.
Rampell is also a Washington Post opinion columnist and recently wrote “What the Heck Is Going on With the U.S. Economy?” Rampell believes the economy is mostly in a good place, particularly in the job market. Inflation is still a disappointment, sitting well above the Fed’s target. But consumers aren’t happy, given the economy’s overall strength.
“If you look at the dollars coming into people’s bank accounts versus the dollars going out because of higher prices, particularly at the bottom part of the income distribution, people are not coming out ahead,” Rampell recently told us. “Particularly at the bottom of the income distribution, earnings are not keeping up.”
How did we get here and what can we expect coming up? Rampell delves into it all.
LISTEN: Catherine Rampell talks about what to expect from the rest of the year on the HerMoney podcast. Listen wherever you stream your favorite podcasts.
How Did We Get Here?
Early on in the pandemic, Americans were traveling less, eating at home, and getting a lot more government support. Now, it’s all but stopped.
“[There was] an expanded child tax credit,” she says. “You had several rounds of stimulus checks. You had more generous food assistance and unemployment insurance. For many people, that influx of cash enabled them to have better living standards than they may have had pre-pandemic. People had a lot of money in their bank accounts and they used it to spend mostly on stuff rather than experiences.”
When the stimulus payments stopped, people felt worse off than they were pre-pandemic. All that money pumped into the system also led to a big surge in buying, which raised prices. Now we’re left in an environment where we have to deal with higher prices, without the help of stimulus payments.
“Given price growth and the end of a lot of those policies, people have run down their savings and they’re feeling like they’re behind, ” Rampell says. “They’re having trouble keeping up with their living standards. Yes, there are a lot of jobs out there, but you only have so many hours in a day to work those extra jobs. For many people, that’s just not practical or possible.”
Should We Still Expect A Recession?
A few months ago, Rampell was very pessimistic about a recession due to rising rates and debt-limit brinksmanship.
“If Congress had decided to default on our debt, that would’ve probably set off a global financial crisis, and lots of really bad things would’ve happened in the economy caused by government dysfunction,” she says. “That, thankfully, has been resolved so that major source of worry for me is gone.”
Job numbers continue to surpass expectations. But that tends to be par for the course.
“Forecasters usually get stuff wrong,” she says. “That’s not unusual. It’s very hard to get the numbers right with precision. What’s weird is that they’ve always been wrong in the same direction. They’ve always been underestimating the strength of the job market. If the economists have been getting it wrong month after month after month, maybe we have been underestimating the strength of this job market and of this economy, and a recession isn’t in the offing.”
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The Paradox Of Thrift
It’s not easy to figure out where to put your money when the economy is in this strange limbo right now. It’s not black and white so it can get confusing.
“[There’s no] clear financial strategy that emerges from this set of conditions we’re dealing with,” she says. “[That’s] in part because the kinds of things you might invest in, if we have a recession, tend to be a little bit different from the kinds of things you might invest in if we have high inflation. Because one implies interest rates falling and one implies interest rates rising.”
So, what do you do if you have both of those things? This is the problem that the Federal Reserve is navigating. They’re worried about a weakening economy and they’re worried about high price growth. And these policies impact consumers. Rampell says when friends ask her if they should make big purchases now, her advice is simple: If you have to do it, do it. If you don’t have to, then wait. Interest rates will drop if the economy sours.
“For the individual, it’s probably a good thing if they’re not splurging on a ton of luxuries,” she says. “But there is this paradox of thrift. If everybody cuts back at the same time, that can cause a recession or contribute to a recession.”
Artificial Intelligence And The Job Market
There’s a lot of uncertainty about where various industries or occupations are heading, Rampell says. But the U.S. Bureau of Labor Statistics regularly releases forecasts for what kinds of occupations they expect to experience more or less growth.
“I believe one of the occupations that is expected to have pretty strong growth in the years ahead is a wind turbine technician, particularly as renewable energy technology has advanced and as policy has changed,” she says. “[The] same thing for a lot of healthcare occupations. That’s not about technological change, but it has to do with how the economy has evolved and how the demographics of our country have evolved as the country has gotten older.”
While some jobs are experiencing growth, others might be tweaked to allow for the emergence of artificial intelligence.
“We don’t know for sure how something like AI will ultimately affect the job landscape,” Rampell says. “There have been disruptive technologies over and over throughout human history that have displaced a lot of people. Whether we’re talking about the invention of the automobile, displacing the buggy whip driver or automated looms replacing hand weavers. Some people are always hurt more than others, but pretty much every time there have been new opportunities created.”
Women In The Workforce Is Rebounding Post-Pandemic
The pandemic was a terrible time for women in the workforce. But now, we can see a major shift in how women have changed working and the workplace for the better.
“Women dropped out of the labor force and were laid off in large numbers,” Rampell says. “There had been this fear the pandemic would have long-term scarring effects for women workers. That it wasn’t just that they were losing their jobs at that moment, but that we would see reduced women’s employment for a very long time. In fact, the opposite has happened. A record share of women have jobs, possibly due to the increased availability of remote work. But women seem to have emerged collectively stronger than ever and I think that is worth celebrating.”
READ MORE: 8 Reasons Why You’re Unhappy At Work — And How To Fix Them
