In a public statement on July 24, 2022, Janet Yellen released a statement with the White House in which she insisted that the United States is not in a recession, even though the economy has seen two quarters of negative GDP growth, which is the traditional definition of a recession. Looking to the past, 2008 was not declared a recession when subprime mortgages failed, instead it was declared after the second quarter of negative growth in 2008.

The years 2008 and 2022 do have some things in common. Firstly, they both have catalysts; for 2008, it was the crash of the subprime mortgage market where bad loans inevitably failed. For 2022, it was the dramatic inflationary period the U.S has been in since early 2021. The difference between these two was the pace at which this catalyst occurred. In 2008, the stock market had a violent crash on Sept. 29, where the Dow experienced a 777-point drop, the largest of all time. 2022 has yet to have a single day in which the market implodes, instead the Dow has trickled down 15% since early 2022. This is different from the Great Depression, in which much of the economy tanked in a single day, known as Black Thursday.

This recession is, in some ways, similar to the stagflation in the 1970s, which put a damper on the economy and led to a high inflation and a stagnant economy. High unemployment also plagued this era, with almost the entire decade spent above 5%.

This, however, is much different than our current economy. Minnesota, for example, has the lowest unemployment rate in the past 3 decades with 2% of the workforce out of a job. Despite this increasingly low unemployment rate, many Americans are finding it hard to make ends meet. According to a new LendingClub report, more than 60% of Americans live paycheck to paycheck with little to no savings in case of an emergency.

Increased inflation has exacerbated the already poor post-Covid economy, with over 9% inflation. According to the U.S Bureau of Labor, many Americans are being squeezed to their limits with no meaningful minimum wage increases or overall wage jumps, many Americans have experienced severe wage cuts even if they have received raises.

According to the Roosevelt Institute, all of this is at a time when corporate markups are at an all-time high in American history. These markups have made corporations and their leaders significantly wealthier over these past few years despite the overall low wage increases and lower material conditions of the bottom 90%.

According to Inequality.org, billionaires have gotten 70% richer since the beginning of the pandemic. Which is in contrast to previous recession which have generally seen detrimental effects in all aspects of the economy, including the rich.

Legendary investor Dr. Michael Burry, who predicted the 2008 recession years before anyone else, believes that the U.S is in for a recession much worse than 2008. He cites increasing inflation in most countries, rapid increase in interest rates, Russia’s invasion of Ukraine and shutdowns in China which have halted much of their economic growth. These combined have created the perfect storm in which a massive global recession could form if swift action is not taken by the US Government and those across the globe.