🚨 2023 Economic Outlook: Is It Worse Than 2008? 🚨
Almost half of Americans (44%) say the economy is worse now than during the Great Recession.
America’s No. 1 Issue | Economic Recovery Timetable | Expected Market Crashes | Inflation’s Effect | Price Predictions | Best Economic Systems | Trust in Financial Institutions | How to Fix the Economy
Three years into the pandemic, Americans are still suffering from economic whiplash, making it hard to predict where the economy is headed in 2023.
Post-pandemic job growth and soaring wages sparked hope of a quick economic recovery, but high inflation, supply chain disruptions, and geopolitical conflicts have economists discussing a new R word: recession.
About 3 in 4 Americans (75%) worry there will be a recession in 2023, while 69% say one is already here, according to a new Real Estate Witch poll.
Americans’ scathing assessment of the economy may be shaped more by fear than facts. More than three-fourths of Americans (77%) say they know the definition of a recession, but just 15% can actually identify the correct answer.
A recession is loosely defined as two consecutive quarters of GDP decline. Although the U.S. technically slipped into a recession in the second quarter of 2022, the National Bureau of Economic Research — the body responsible for officially declaring a recession — has yet to reach a verdict.
GDP actually improved in the third quarter of 2022, but that did little to sway public opinion. Nearly two-thirds of respondents (63%) are pessimistic about how the economy will perform in 2023. As negative sentiment persists, 2 in 3 Americans (64%) believe fear of a recession could lead to a self-fulfilling prophecy.
Given their 2023 economic outlook, nearly all Americans (87%) are preparing for a recession, with 44% saving more money and cutting back on non-essential spending. Three-fourths of Americans (71%) also say they have sacrificed their personal happiness to shore up their finances.
It’s, perhaps, a small price to pay when the stakes are so high: More than half of Americans (55%) say they’d lose everything if there was a recession.
📉 2023 Economic Outlook Statistics
- About 3 in 4 Americans (75%) worry there will be a recession in 2023, while 69% say one is already here.
- 77% of Americans say they know the definition of a recession, but just 15% actually do.
- More than half of Americans (55%) say they’d lose everything if there was a recession.
- 80% of Americans don’t expect the economy to improve at all in 2023, while nearly half (47%) expect it to get worse.
- More than half of Americans (58%) believe the economy won’t recover to pre-pandemic levels before 2024, while nearly 1 in 5 (18%) don’t think it will ever recover.
- More than 8 in 10 Americans (81%) think there will be some type of market crash in 2023.
- Nearly all Americans (93%) think the economy was bad in 2022, with 44% saying it’s worse now than during the Great Recession.
- More than 3 in 4 Americans (77%) worry that the cost of goods and services will continue to rise in 2023, and 70% fear that price hikes could cause them to go into debt.
- Fewer than 1 in 4 Americans (21%) think the U.S. economy would perform best under capitalism, while about 1 in 8 (12%) say socialism would be a better alternative.
- Boomers (38%) are nearly 2x more likely than millennials (19%) and Gen Z (18%) to say capitalism is the best economic system.
Americans Rank the Economy as the Country’s Most Pressing Issue
Americans’ highest priority in 2023 is the economy, followed by affordable housing, crime, and abortion.
More than 1 in 5 Americans (21%) say the economy is their No. 1 concern for the country, while 43% list it in their top three.
Even in an era of extreme polarization, reversing the country’s poor economic performance is something nearly all Americans — regardless of age or political party — can agree on.
Boomers and millennials each rank the economy as their top priority. Conservatives and liberals differ only slightly, with conservatives choosing it No. 1 and liberals selecting it No. 2 behind affordable housing.
On average, Americans rank the following issues from most to least concerning:
- The economy and inflation
- Affordable housing
- Crime/gun violence
- Abortion/reproductive rights
- Climate change
- Racial issues
- Cannabis legalization
- LGBTQ+ rights
|1||The economy/inflation||Affordable housing||The economy/inflation|
|2||Affordable housing||The economy/inflation||Crime/gun violence|
|3||Crime/gun violence||Climate change||Affordable housing|
|4||Abortion/reproductive rights||Abortion/reproductive rights||Immigration|
|5||Climate change||Crime/gun violence||COVID-19|
|6||Racial issues||Racial issues||Abortion/reproductive rights|
|9||Cannabis legalization||LGBTQ+ rights||Racial issues|
|10||LGBTQ+ rights||Cannabis legalization||LGBTQ+ rights|
80% of Americans Don’t Expect the Economy to Improve in 2023
Americans desperately want to fix the economy because nearly 3 in 4 (74%) think it’s headed in the wrong direction.
Among less jaded young people, there’s still some hope that the U.S. can maintain a strong economic position. Gen Z (30%), for example, is about 2x more likely than boomers (16%) to say the economy is not headed in the wrong direction.
However, 80% of Americans don’t expect the economy to improve at all in 2023, while nearly half (47%) expect it to get worse.
A majority of Americans (82%) expect the economy to eventually recover, but they don’t expect relief anytime soon. More than half of respondents (58%) think the economy won’t recover to pre-pandemic levels before 2024, while 42% expect it won’t recover before 2025.
Nearly 1 in 5 Americans (18%) don’t think the economy will ever recover, though. Predictably, the more pessimistic boomers (28%) are about 2x more likely than millennials (16%) and Gen Z (13%) to assume the economy will never recover.
80% of Americans Expect Market Crashes in 2023
If the economy continues its downward spiral, as Americans predict, more than 8 in 10 respondents (81%) think some markets will crash in 2023.
Forty percent expect the general U.S. economy to crash, while more than 1 in 4 (27%) believe the global economy will collapse.
With global economies interlinked, Americans worry international events that are pushing other countries toward a recession may cause the same to happen in the U.S.
Nearly 2 in 3 Americans worry that the Russia-Ukraine conflict (64%) and the ongoing COVID-19 pandemic (61%) will continue to impact the U.S. economy in 2023.
When it comes to specific markets, the most common expected to fall are the stock market (38%), cryptocurrency market (33%), job market (28%), and housing market (27%).
The Stock Market
2022 was a painful year for the stock market. In June, it entered a bear market — meaning stocks dropped 20% from recent highs — and all three major U.S. indexes posted their worst year since 2008.
A new year does not bring new hope, and 81% of Americans think the stock market will perform the same or worse over the next 12 months.
It’s no surprise, then, that nearly half of Americans (47%) think it’s a bad time to invest in the stock market, and 1 in 6 (17%) are taking money out of the market to prepare for a recession.
The Cryptocurrency Market
Cryptocurrency values started 2022 at record highs but came crashing down to earth by the end of the year — culminating in the collapse of the FTX exchange.
The market’s quick reversal of fortune has led to widespread skepticism, especially among older generations. Nearly 1 in 3 Americans (31%) view cryptocurrency negatively, including 57% of boomers.
In fact, boomers (51%) are 2x more likely than Gen Z (25%) to expect another crypto crash in 2023.
The Labor Market
As the post-pandemic labor shortage continues, a majority of Americans (62%) say it’s still a good time to find a job. However, as recession fears grow, that percentage dropped 11% since September 2022, when 70% of respondents said the same.
High-profile layoffs have marred public optimism in the labor market. About 44% of Americans say someone in their household has been laid off in the past year, and more than half (52%) worry about their job security in 2023.
The good news is there are still about 1.7 unfilled jobs for every unemployed worker, keeping the unemployment rate low at 3.7%.
But if hiring slows in 2023 as economists predict, Americans expect the unemployment rate to rise. More than one-fourth of Americans (27%) think it will double, hitting 8% or higher in 2023. Another 1 in 7 Americans (14%) think unemployment will climb to at least 10%.
Americans’ fear of losing their jobs may cause them to vastly overestimate the scope of unemployment.
The last time unemployment surpassed double digits was during the pandemic, when monthslong industry shutdowns caused the rate to hit 15%. Before that, the unemployment rate hit 10% in 2009 during the Great Recession.
To prepare for a recession, experts recommend taking advantage of the strong labor market while it lasts. About 1 in 3 Americans (32%) are working a second job or a side gig to earn additional income, while more than 1 in 4 (28%) are looking for a new job.
The Real Estate Market
After a record-setting year in 2021, the housing market cooled substantially in 2022 when the Federal Reserve raised interest rates to tame rampant inflation.
Higher borrowing costs priced many buyers out of the market, and home sales dipped 7.7% in November 2022, according to the most recent data from the National Association of Realtors.
Americans expect the slowdown of home sales to continue, with 82% saying the real estate market will perform the same or worse over the next 12 months. But experts don’t anticipate a collapse of the same magnitude as 2008.
One significant difference is that housing is in short supply, propping up demand and home values when they should, theoretically, fall in greater measures. High inflation and rising interest rates don’t make home buying any easier.
Fifty percent of Americans already believe the typical cost of a home is too expensive, and with additional interest rate hikes expected, another half (51%) predict mortgage payments will rise in 2023.
Under such conditions, more than half of Americans (54%) think it’s not a good time to buy a home, and 45% don’t think it’s a good time to sell a home, either.
High Inflation Sours Americans’ 2023 Economic Outlook
Americans believe the U.S. economy has declined over the past four years, with consumer sentiment bottoming out in 2022.
Nearly all Americans (93%) say 2022 was a bad year for the economy as inflation climbed to 9.1% in June — the highest mark since 1981.
In fact, Americans believe the economy was worse in 2022 (93%) than it was in 2020 (84%), when entire industries shut down for months because of the pandemic.
What’s more, 44% believe the economy is worse now than it was during the Great Recession.
Current pessimism may taint the public’s view of the past. More than 1 in 5 respondents (22%) think the U.S. hasn’t had a good economic year in the past decade — even though 2018 was a banner year for the economy.
Costs Rose in 2022, but Fewer Than Half of Americans Earned More Money
As prices surged, more than half of Americans (52%) say their household income did not rise in 2022 — prompting two-thirds (64%) to say they’re worse off financially than they were a year ago.
About three-fourths of Americans (74%) live paycheck to paycheck, and a staggering 77% had to cut spending in 2022.
Experts suggest inflation is past its peak, but more than 3 in 4 Americans (77%) worry prices will continue to rise in 2023. Americans are so worried about inflation that it may lead to catastrophic thinking.
Inflation has fallen from 9.1% to 6.5% in the past six months, but about two-thirds of Americans (60%) believe the worst inflationary pressure still lies ahead. Nearly half of Americans (45%) think inflation will climb to 8% or higher in 2023, while 1 in 5 (21%) think it will reach at least 10%.
Approximately 70% of Americans already struggle to afford basic expenses, and additional price hikes could add to their problems. Another 7 in 10 Americans (70%) fear that increasing costs may cause them to go into debt.
Nearly 2 in 3 Americans (63%) expect the general cost of living to increase this year. In particular, they expect price hikes for the following goods and services:
- Groceries (66%)
- Utilities (62%)
- Rent (59%)
- Gasoline (57%)
- Health care (53%)
Americans are 7x more likely to say groceries will get more expensive, opposed to less, and 8x more likely to say utility costs will rise in 2023.
However, more than one-third of Americans (38%) — including 50% of conservatives — say a Green New Deal aiming to slash energy costs in the long run would hurt the economy.
A Year From Now, Americans Believe Low-Income Earners Will Be Worse off Financially
Financial progress has eluded a majority of Americans as price increases outpace wage growth.
About 3 in 4 Americans (76%) thought they’d be better off financially by now, and many — especially in the middle and lower classes — don’t expect their situation to improve.
The middle class has contracted so much over the past five decades that more than 1 in 3 Americans (36%) no longer believe it exists. Respondents who do believe it exists are 2x more likely to say that, in one year, the middle class will be financially worse (34%) — not better (18%).
The disparity is even greater for low-income earners. Respondents are nearly 3x more likely to say the group will be financially worse (47%) — not better (17%) — in one year’s time.
Predictably, wealthy Americans are the only group respondents think will fare better 12 months from now. In fact, twice as many Americans say high-income earners (32%) will be doing better financially compared to low-income earners (17%).
Fewer Than 1 in 4 Americans Think Capitalism Is the Best Economic System
Americans are losing faith in capitalism as income inequality and economic dissatisfaction grow among the population.
Fewer than 1 in 4 Americans (21%) think capitalism is the best economic system for the U.S., while about 1 in 8 (12%) say socialism would be a better alternative.
Public support for capitalism is underwhelming, but the system has a staunch group of allies among political conservatives and baby boomers. Conservatives (35%) are 75% more likely than liberals (20%) to say capitalism is the best economic system, while boomers (38%) are 2x more likely than millennials (19%) and Gen Z (18%) to also prefer capitalism.
Boomers experienced financial success under the capitalist system, and 41% still view it favorably — compared to just 26% of millennials and 23% of Gen Z.
On the other hand, younger generations feel cheated by capitalism. After taking on the costs to educate and train themselves, they had to work for stagnating wages and fewer benefits that made it difficult to weather recessions, which have hit millennials twice in their short careers.
It’s no wonder this era’s capitalism is driving the younger generations to embrace socialism. More than one-fourth of millennials (29%) and Gen Z (28%) have a positive view of socialism. In fact, both millennials and Gen Z tend to have a more favorable opinion of socialism than capitalism.
What’s more, 15% of Gen Z say socialism would be the best economic system for the U.S. — making them 50% more likely than boomers (10%) to say so.
Although some Americans want the state to be more involved in the economy through socialism, 76% don’t have a positive view of the current government, with 32% viewing it negatively.
More than 1 in 3 respondents (34%) view the Republican Party negatively, 1 in 4 respondents (28%) view the Democratic Party negatively, and 1 in 11 respondents (9%) view both parties negatively.
Americans may argue about whether the market or the government should determine economic policies, but when it comes down to it, many remain unsure. More than 1 in 3 Americans (38%) don’t know what economic system would work best for the U.S.
Do Americans Still Trust Core Financial Institutions?
Financial institutions — such as banks, mortgage companies, and brokerage firms — are vital for regulating the economy, but many Americans don’t trust them.
Public resentment is rooted in the 2008 economic collapse, which some Americans blame on the power and greed of the financial sector. Protestors who camped outside Wall Street demanded change, but more than a decade later, those institutions have yet to regain trust among the American people.
Today, 81% of Americans think Wall Street impacts the economy, but 76% do not view it in a positive light. Additionally, more than one-fourth of Americans distrust loan companies (28%) and the stock market (27%), while about 1 in 5 (22%) are skeptical of investment firms.
As Americans struggle financially, it’s easy to cast blame on a system that seems to create inequality and breed greed. Overall, 78% of respondents do not have a positive view of wealthy Americans, while more than 1 in 3 (37%) view them negatively.
Most Americans don’t have the luxury of affording a financial planner and manage their money themselves. To avoid costly mistakes, a majority of Americans support more financial education in schools and through the media.
Americans think high schools should spend more time teaching students about:
- How to manage their personal finances (58%)
- General economics (53%)
- Investing (45%)
- Filing taxes (44%)
- Health care (53%)
Meanwhile, 3 in 4 respondents (79%) think the media should devote more attention to the economy and inflation.
As the Fed Attempts to Slow Spending, Americans Want More Cash
Fewer than half of Americans (45%) say they make enough money to live comfortably, and high prices are continuing to strain households on a tight budget.
As inflation erodes wage gains, 80% of respondents, including 78% of conservatives, believe the government should do more to help Americans afford basic goods.
Surprisingly, the public agrees that the government can improve the economy by putting more cash in Americans’ pockets. About 3 in 4 respondents support:
- Lowering taxes for low- and middle-income earners (76%)
- Another stimulus check (76%)
- Raising taxes on the rich (75%)
- A higher federal minimum wage (72%)
The most popular solution among liberals is raising taxes on the rich (81%), while conservatives propose lowering taxes for all Americans (78%).
Despite advocating for limited government spending, a shocking majority of conservative respondents believe the financial situation has become so dire that the government should intervene. Approximately 2 in 3 conservatives support another stimulus check (67%) and increasing the federal minimum wage (61%).
But conservative support for government action only goes so far. Conservatives diverge most significantly from liberals over student loan forgiveness, which is being deliberated in the Supreme Court. Just 57% of conservatives are in favor of canceling student debt, compared to 79% of liberals.
The general public may back these measures to boost their spending power, but economists warn that infusing the economy with cash through stimulus checks, tax breaks, and higher wages would likely lead to more inflation.
The proprietary data featured in this study comes from an online survey commissioned by Real Estate Witch. One thousand Americans were surveyed Dec. 20-21, 2022. Each respondent answered 21 questions related to their views on the economy, as well as their economic outlook and expectations for 2023.
About Real Estate Witch
You shouldn’t need a crystal ball or magical powers to understand real estate. Since 2016, Real Estate Witch has demystified real estate through in-depth guides, honest company reviews, and data-driven research. In 2020, Real Estate Witch was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $70 million on realtor fees. Real Estate Witch’s research has been featured in CNBC, Yahoo! Finance, Chicago Tribune, Black Enterprise, and more.
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Will there be a recession in 2023?
Nearly 3 in 4 Americans (75%) worry there will be a recession in 2023, with 69% saying a recession is already here. Learn more.
When will the economy recover?
More than half of Americans (58%) believe the economy won't recover to pre-pandemic levels before 2024, while nearly 1 in 5 (18%) think it will never recover. Learn more.
What is a recession?
A recession is loosely defined as two consecutive quarters of GDP decline. More than three-fourths of Americans (77%) say they know the definition of a recession, but just 15% can actually identify the correct answer. Learn more.