The Economy In 4 Charts

Hi, today we're exploring: The economy. Hello and happy Sunday! How is the economy doing? We’ve been poring over the numbers all week trying to answer that question... and we’ve come up with 4 charts that we think tell the story of how the great American economic machine is faring. Read this newsletter on the web instead [here](. Today’s edition comes to you in partnership with Rocket Mortgage, the lender recommended by 9 in 10 of those who use them.¹ It takes ~10 mins to [get prequalified with Rocket Mortgage]( by answering a few questions — and right now, Chartr readers get $1,000 in lender credit when they [lock in a loan with Rocket here]( TOGETHER WITH Through the looking-glass A recent [Harris X Guardian]( poll made for some striking reading for those of us who spend our days buried in data. According to the survey, the majority of Americans believe the nation is currently in a recession (it’s not), 49% think the S&P 500 is down for the year (it’s up 11%), and the same percentage believe unemployment is at a 50-year high (again, it’s not). It would be easy to dismiss the survey, but if a significant number of Americans feel the economy isn’t working for them, we have to ask: what’s going on? The simplest explanation is that most of us are bad at gauging how a $30 trillion economic machine is faring. So, we focus on our own financial situation — and on a personal level, many people are feeling the strain because of the one elephant in the room that just won’t go away: inflation. Indeed, a [Gallup poll]( from March found that inflation continued to outrank crime, healthcare, terrorism, energy, the environment, drug use, and many other topics as America’s top concern. Sticky downwards Arguably the biggest problem is that economists tend to focus on the bleeding edge of the economic data, often looking not just at the level of inflation, but estimates of its trajectory — is it accelerating, decelerating, etc. But, as one astute investor posted on X (formerly known as Twitter)… that’s not what [normal people care about](. If inflation is 10% annually for 2 years, and then drops to 5% in the third year, economists and investors may rejoice at the progress, but almost no-one else will blink. That’s because the cumulative effect of that sequence of events is a 27% increase in prices over 3 years… which people notice when they buy [butter]( [insurance]( [hot dogs]( or gas. That example is not a million miles away from what has actually happened. Many prices are now 20-30% higher than they were in 2020 — and, while inflation has cooled substantially, to just 3.4% as of the latest CPI report, that still means costs are rising. McDonald’s went so far as to [comment directly]( on its own price rises, after videos of expensive Big Mac meals, including one for $18, went viral. McDonald’s says its prices are up 40% in the last 5 years, reflecting a broader rise in the cost of labor, paper, and food. [Sponsored by Rocket Mortgage]( Good as gold... …or in the case of real estate, even better. Per a [2024 Gallup survey]( Americans of all income levels firmly believe that real estate is the best long-term investment over stocks, bonds, gold and crypto — and for good reason. Homes tend to [go up in value]( and buyers know they’re a good way to build equity. But for many, it’s hard work getting a foot in the door. As America’s largest mortgage lender, [Rocket Mortgage]( has seen thousands of homeowners through the journey. They’ve got experts on hand 24/7 to ensure you lay the financial foundations of a smart investment and a dream home. Right now, Rocket are offering Chartr readers [lender credit of $1,000 when they lock in a loan using this link]( [Save $1000 on closing costs with Rocket Mortgage]( USA #1 Another reason economists might have a rosier view of the American economy than the general public? A global perspective. Indeed, the US has seen real GDP grow by nearly 9% since the pandemic began, by far the strongest of any of its G7 peers, which have averaged only 2.7%. Canada’s economy has been the next best in the group of seven, growing 5%. The hiccup in the US recovery was a brief two-quarter GDP dip at the start of [2022]( — fitting the classic recession definition. But, the National Bureau of Economic Research, which makes the final decision, decided not to classify it as [one](. Furthermore, despite all the talk of mass layoffs and automation, US unemployment has remained below 4% since the beginning of 2022, near historically-low levels. In contrast, the UK economy has been much weaker than America’s. Indeed, British GDP is barely larger, in real terms, than it was at the end of 2019… just as the electorate gears up for a July 4th election. The great American consumer Despite sky-high interest rates and inflation, good old-fashioned consumer spending – the biggest slice of the US economic pie – has been nearly unstoppable for more than 3 years, with people continuing to splurge. However, very recently, there have been signs that some consumers might be starting to crack. Retail sales growth halted abruptly in April, and recent earnings from Target and Walmart suggest that lower-income consumers are starting to struggle, with [Fortune]( reporting “a shift from spending on wants to needs”, with similar sentiments shared by executives at other [consumer companies](. In recent years, when consumers felt the pinch, many had pandemic-era [savings to dip into]( thanks to stimulus checks, enhanced unemployment benefits, tax credits, and the fact that there wasn’t much to spend your money on during lockdown. This influx of cash bolstered our bank accounts significantly: one economic model estimates that America banked excess savings worth a staggering ~9% of nominal GDP during 2021. But, that buffer is now disappearing, with excess pandemic-era savings now sitting at just above 2% of nominal GDP and falling according to [estimates]( from the Fed at the end of last year. More recent [analysis]( from third-parties suggests that those excess savings are now all gone, leaving consumers more vulnerable. Average Joes vs. CEOs Interestingly, while consumers are beginning to show signs of strain, CEO confidence tells a different story. Indeed, executives remain positive about the economy, with pandemic-era supply constraints now a thing of the past and earnings continuously exceeding expectations. The positive in all this for the Average Joe, as Luke Kawa [explains]( is that if this corporate optimism continues to translate into more business investment, new employment opportunities are usually close behind. But, employment opportunities tomorrow, while prices rise today, is a hard slogan to sell. At least the stock market keeps going up. [Sponsored by Rocket Mortgage]( America’s favorite investment? 36% of Americans see [real estate as the best long-term investment]( — the top choice, ahead of stocks or mutual funds (22%), gold (18%), and savings accounts or CDs (13%) in 2024. [Rocket Mortgage]( has helped thousands of homeowners build the financial foundations of a smart real estate investment, with 90% of clients willing to recommend them.¹ If you’re thinking of buying, secure lender credit of $1,000 with Rocket by [locking in your loan here]( Thanks for reading, wishing you a wonderful Sunday! Have some [feedback](mailto:daily@chartr.co?subject=Feedback&body=Hi%2C%0A%0AI%20like%20the%20newsletters%2C%20but%20I%20had%20a%20thought%20for%20you...) or want to [sponsor]( newsletter](mailto:james@sherwoodmedia.com?subject=Chartr%20NL%20Sponsorship%20Enquiry%20)? Not a subscriber? Sign up for free below. [Subscribe]( Advertiser’s Disclosures: ¹ Based on a Rocket Mortgage market research questionnaire of clients whose loans closed in 2022. ² Clients will receive a lender credit of $1,000 when they lock a loan on or after October 20th, 2023, utilizing the Chartr Newsletter application link. Offer cannot be retroactively applied to previously closed/locked loans. 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