Nothing feels particularly normal lately.
I suppose if you come down a global pandemic and an ill-conceived attempt to overthrow your country’s governmentand move straight into from there a new war with Russia and School kids being massacred in their classrooms for no damn reasonYou will feel a little uncomfortable.
I think our crumbling institutions and the general sense of anxiety pervading society have a lot to do with how people think we’re doing economically. The economy hasn’t been in bad shape so far this year. Unemployment is at its lowest for more than half a century, wages are rising and corporate profits are resilient. Still, people are not very optimistic.
Found a recent Gallup poll that only 2 percent of Americans rate the current economic situation as “excellent.” Another 18 percent said economic conditions were “good.” Another 42 percent and 38 percent thought economic conditions were “poor” and “fair,” respectively.
The same poll found that only 20 percent of Americans believe the economy is improving. More than three-quarters of those polled in this Gallup poll said the economy is deteriorating.
But the pessimistic majority is wrong, at least according to the new estimates from our national, bipartisan number-crunchers at the Congressional Budget Office. In A new report released on May 25 predicted the CBO that real gross domestic product will grow by 3.1 percent by 2022 – not a record GDP growth rate in historical comparison, but at least a respectable one. With this latest report, the CBO also revised upwards its long-term GDP growth estimates for 2023 and 2024.
The good news goes beyond the growth rate of the overall economy. The CBO noted that inflation has peaked. According to the CBO (as measured by the CPI), we’re looking at 4.7 percent inflation for 2022, but inflation is already declining from this spring’s highs. Inflation is expected to fall further to 2.7 percent by 2023 and 2.3 percent by 2024. Those numbers would bring inflation just above the Fed’s 2 percent target within two years.
In addition, the CBO report could have a good impact on the stock market. Stocks have taken a hit in recent months. However, stock prices have fallen more on what analysts think the economy might act than on what the economy has actually done in the present. Some of the assumptions baked into the stock market could be wrong.
The CBO forecasts that the Fed will raise its federal funds rate to 1.9 percent by the end of this year as part of its efforts to fight inflation. This is well below the prevailing market expectation of over 2.5 percent.
Pretty much any way you look at them, the New CBO numbers point to better days for US economy. Of course, many things can go wrong, including our own attitude. Unfortunately, many of us who simply believe inflation will rise may actually cause inflation to rise.
Economically, we’ve been in a strange place for a long time. Barring above-average inflation, the numbers really haven’t been looking bad for quite some time. Now the new CBO report shows that even the biggest economic concern of recent times, inflation, has peaked. It turns out that people’s feelings aren’t always based on what the truth is.
Perhaps as inflation eases, people will find their economic optimism again. Or maybe not. I don’t think most Americans pay as much attention to the CBO reports as anyone reading this does. My money is on people who feel the economy will do better just by feeling better.
Jonathan Wolf is a civil litigator and author of Your Debt Free JD (affiliate link). He has taught legal writing, written for a variety of publications, and made being financially and academically literate both for his business and pleasure. Any views he expresses are probably pure gold, but nonetheless are solely his own and should not be attributed to any organization to which he belongs. He wouldn’t want to share the credit anyway. He can be reached at [email protected].
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