Monday, July 21
Is the recession already here? Thanks to years of high inflation and interest rates, even Americans with jobs are struggling to pay for necessities.
Consumer staples prices have soared. Everyone knows about the price of eggs, which have nearly tripled since inflation took off in 2021. But utility prices are up 45%, milk is up 20%, chicken is up 30%, ground beef costs 40% more, and President Trump’s plans for higher tariffs mean even higher prices.
To get by, a record number of Americans are working at least two jobs. S&P Global reported 8.9 million Americans now work more than one job, the highest figure ever.
In an earnings call, the CEO of discount retailer Dollar General said consumers are having trouble affording basic goods. Walmart is seeing consumers struggle too.
Folks are worried. In February, consumer confidence fell at the fastest pace in nearly four years.
In our consumer-centric economy, things have been stabilized by the top 10% of earners (i.e., households making $250,000 or more) because inflation has made everybody else poorer. The wealthy account for nearly half of U.S. spending. Three decades ago, it was 36%.
An economy dependent on the rich isn’t healthy, it’s a house of cards waiting to fall.
It’s likely a big stock market selloff or plunge in home values will shake affluent Americans. That will cause them to cut spending, just like everyone else.
It’s starting to happen. Costco said its customers are becoming choosier. Starbucks same-store sales have fallen for five straight quarters. In 2025’s first quarter, 188 U.S. companies went bankrupt, the highest number since 2010.
Also, keep in mind that stocks have fallen by 37% on average in the past five recessions.