Jamie O’Regan makes a six-figure salary as the director of alumni relations for a Brooklyn private school, and lives in a Jersey City apartment with a rooftop pool.
But Ms. O’Regan, 38, is feeling the pinch of higher prices. Starting July 1, her landlord raised her rent by $500, to $2,900 a month. She got rid of her car, which was costing $600 a month between parking, insurance and loan payments. Able to work from home during the summer, she has saved $100 per week by not commuting. She’d like to buy a house, but sees no path to doing so, and now is considering taking on a roommate.
“If I feel like I’m living paycheck to paycheck, how does the average person function?” Ms. O’Regan said. “There doesn’t seem to be anyone who feels immune to this.”
Economists say weak consumer sentiment isn’t likely to turn an otherwise healthy economy into a sick one. But it could amplify or prolong an already-bad situation. In marginal cases, an official recession declaration — and the attendant media attention — can create markedly worse outcomes than weak economies that barely escape recession.
The relatively brief recession of 1990 and 1991, for example, didn’t have an obvious cause like an asset bubble. For that reason, scholars have theorized that it may have been fueled by a poor national mood brought on by the Gulf War, an oil price shock and the interest-rate increases.
Still, the link between consumers’ perceptions and economic outcomes is not straightforward. Sentiment dropped sharply following the terrorist attacks of Sept. 11, 2001, for example, but actual spending rebounded rapidly, possibly because of a rally-around-the-flag effect that helped buoy the economy quickly past the dot-com bust.
Article source: https://www.nytimes.com/2022/07/15/business/economy/inflation-economy-polling.html
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