A recent survey finds that a big majority of Americans think the U.S. economy is in poor condition, despite robust data. Cheddar News speaks with Tom Wheelwright, CPA and entrepreneur who explains what is really going on in the economy right now.  

Cheddar's News Wrap

What Is the Real State of the American Economy?

Welcome back to Cheddar news wrap now this summer is shaping up to be kind of a bummer and many Americans are blaming the economy? In fact, a recent CNN poll shows that 82% of Americans think the economy is in poor condition with most people saying they're concerned about inflation and the rise of living costs. Starting me now is Tom Wheelwright C. P, a entrepreneur and author Tom The same poll found that 64% of Americans think we're in a recession right now. While we are not, why do so many Americans feel like we are in, are feeling the squeeze? Well, you know, it's all about confidence. Right? So the question is, are we confident that the economy is going to keep going and when you have inflation? So for the month of June while we were told the annual inflation was 9.1%, the monthly inflation was 15.6%. So when you see inflation at a double digit rates, that's going to say, wow, am I going to be okay going forward even though I may be okay right this minute. So the White House was bragging yesterday that gas prices are dropping at a record pace. Take a listen for a second. We're very happy to report the current drop in the price of gas down 50 cents per gallon over the past 34 days is one of the fastest decline in retail gas prices in a decade, at current prices. The average American driver will spend about $25 per month less on gasoline than they would have if prices had stayed at their june peak. Do you think that this is some kind of relief to those who are literally counting pennies? Well it's certainly temporary relief whether it's long term relief is yet to be seen, The price of a barrel of oil is not going down. So you know, there's a temporary dip in gas prices doesn't necessarily mean that we have long term inflation control. In fact, I think it's pretty clear, we don't, so people see falling gas prices and they correlate gas prices with inflation. Tell me about this misconception and what other factors play into inflation overall if there is a misconception, of course, I mean gas prices are part of it, but remember you have a whole basket of goods, so you have groceries which are, you know, we're still seeing, we're still seeing groceries going up, we've got, we've got housing prices which while they're slow down a little bit, they're still going up. We see rents are still going up really high. And so I think you just see a lot of other things while gas prices are one thing 50 cents out of, you know, five or $6 isn't nearly as big as, you know, you might think because they've gone up so much more than that in the last year. So we're hearing that americans are traveling, we're hearing about travel hitting pre pandemic numbers, we hear about airports do struggling to keep up with travel if everyone's broke if inflation. So hi, how are these folks traveling right now? Well that there's a lot of pent up cash. Um You know, clearly we got a lot of people got a lot of money during the pandemic. There was a lot of cash given out and I think people are just tired of sitting at home. So I just think it's pent up demand. I think it's short term and I think that we're going to see that dwindle if people really feel if they really feel the pinch of inflation, I think that's going to go away. So unemployment rate, the unemployment rate rather is at a near record low at 3.6%. But when you look at GDP data, the economy is shrinking. So explain what's happening here. Well, we've all heard of the great resignation, right? And what people I think aren't realizing is that a lot of that great resignation is coming from retirement of baby boomers retirement, baby boomers, they're not coming back. So they just decided, well they might have held on during covid because they felt like, well I need to still be working, but now that they've got, you know, some payments now that they're just going, I'm tired, I'm just gonna retire. I see a lot of that um with my clients that I see people going to, you know, I just don't think it's worth anymore. I'm gonna retire. They're not coming back and they're not included in that unemployment figure. So when will consumer feel real relief? And can the government do anything to help speed that feeling up? Well, it's an interesting question because if you look back the last time we had this was when in the early eighties and I'm old enough to remember that um two things were going on. One, we had the Fed raising interest rates, which is going on right now. But the other thing we had was we had Ronald Reagan decreasing taxes and you know what, I don't know that we're going to see decreasing taxes. So really taxes would be the biggest thing that the government could do would be to decrease taxes of the average american. All right. Tom Wheelwright C. P, a entrepreneur and author. Tom always a pleasure to have you on. Thank you so much for joining us.