Who can blame the 59% of Americans that think we are in a recession when probably all have felt the strains of higher pricing on lots of things, especially housing. That, combined with the media (both traditional and social), that messages the negative doom and gloom narrative 24/7.

Affirm recently ran a survey of 2,000 individuals and 59% thought the US was in a recession. Now of course, this is inaccurate, but most individuals don't care about GDP or even know what that means. Many choose to ignore facts and data or don't believe they are accurate. There is lots of evidence that the economy is slowing. Many major corporations have indicated a clear slowing of spending. And while some purchase and rental prices on housing have come down, some are still rising and even with rates down, many still cannot afford to buy or rent. Unless they cut out spending on something else. Sacrifice:  A new concept? 

The reality is that the extremes of rising prices, like interest rates, went too far, too fast, and now they have hit a wall of resistance. And during this resistance, the general mood or vibe is one of a 'slowing' economy or a recession. Some are calling it a VIBE-cession, where we define things via feelings, not facts. Who really cares about 'the data' when it's your personal circumstances, your reality, that define your perceptions? US recessions last anywhere between 2 - 16 months over the past century. Many believe this recession started 15 months ago. The 2020 recession lasted just 2 months, mostly because trillions of Federal dollars were pumped into the system to avert a deep recession or depression. According to the data, which is a bit dated, the US economy is still growing, although much slower compared to prior boom-boom years.

Is this perception good or bad? I personally believe a bit of caution and fear can avoid lots of further damage. It helps avoid some speculation and bigger risk-taking. If rents show weakening, maybe investor home buyers will cut back? With about 70% of the economy based on consumer spending, anyone selling anything will think twice about raising a price, certainly not at the levels we saw over the past few years. While the consumer exercises more prudence and caution, industry sellers might have to curtail their irrational pricing expectations. Already we are seeing a spike in reduced ASKING prices in some areas, often those that had irrationally exuberant pricing to begin with.

Sadly, in the housing world it is only in fully or over supplied areas that this price moderation will apply. We still have massive housing shortages in areas and classifications.  At the end of the day housing demand is driven by what people can actually afford as the systems in place to borrow to buy are far more rigid. Unlike charging your credit card with zero intent of repaying it, obtaining a mortgage is a lot tougher. Profit margins are bound to shrink after a few years of record-shattering profits driven mostly by greedflation fueled excessive price hikes well beyond the drivers of inflation. You can only get away with that for so long.

A more fearful consumer is a more prudent consumer. A less arrogant seller may be helpful too. 70% of our economy is reliant on this consumer group. Sometimes prudence pays!