Inflation, interest rates and unemployment continue to stay on the minds of many Americans as federal policy rapidly changes.
NPR’s Chief Economics Correspondent Scott Horsley says the economy has downshifted in the last year.
"I think it's pretty clear that the economy is growing more slowly than it was, and we're certainly adding jobs more slowly than we were a year ago."
Horsley says when he talks to people as he's reporting, the price of everyday purchases like groceries remains a major concern, even though the rate of prices increases for food have slowed.
"Everybody lives their own economy. Everybody has their own experience at the workplace, at the supermarket," he said. "So, I'm not going to tell anybody if they're experiencing something that feels a little different than what the official data suggests."
He says those personal observations are what drives his reporting.
"I think those human stories of people's sort of subjective assessment of the economy, ultimately, are what add up to the bigger economy."
Interview Highlights
On the main economic concern that comes up in his reporting
I think prices are still a big concern for people, the rise in prices, especially for things we use every day, groceries, rent, electricity. All those prices are still climbing, and that's worrisome for people. Food prices aren't going up as fast as they had been, but they're not coming down. And that's definitely worrisome for people. Can they stretch their paycheck far enough to cover the monthly bills?
On people's perceptions of the economy
People tend to filter their views on the economy very much through partisan lenses. So for example, we see Republicans now feeling better about the economy than Democrats, and it was the opposite a year ago. And that's been very true for a long time now, where people tend to kind of look at the economy through rose-colored glasses, and then when the person in charge of the White House changes, they change their lenses and see the economy somewhat differently.
On the potential for a recession
Even if we don't technically go into a recession, the difference between growing at a 10th of a percent per year versus shrinking at a 10th of a percent per year doesn't mean that much to the ordinary person. If the economy is growing slowly or shrinking or just kind of in a slump, whether it's a technical recession or not, that doesn't feel very good. I think we're definitely closer to that slumpy kind of economy than we were part, the combination of slow job growth and prices continue to go up. It's not as robust an economy as we were looking at a year ago.
Interview Transcript
Sophia Saliby: Inflation, interest rates and unemployment continue to stay on the minds of many Americans as federal policy rapidly changes.
And it’s NPR’s Chief Economics Correspondent Scott Horsley reporting to help us make sense of it all.
Scott joins me now in studio. Thanks for being here.
Scott Horsley: Sophia, it's great to be with you.
Saliby: What do you think is the biggest change the American economy has seen between a year ago in the middle of the presidential election, to now, nine months into this new Trump administration?
Horsley: We have definitely seen a downshifting in the economy during that period. The economy is growing more slowly now than it was a year ago at this time. Now, some of that's being distorted by the trade war and people bringing a lot of goods into the country and then stopping bringing as many goods into the country when the first tariffs went into effect.
And so, there's been some distortions in the official data, but I think it's pretty clear that the economy is growing more slowly than it was, and we're certainly adding jobs more slowly than we were a year ago. And just this week, we learned that we added a lot fewer jobs in the 12 months ending in March than were initially tallied.
Saliby: So, when you talk to ordinary people, what is the biggest economic concern that seems to be on their minds?
Horsley: I think prices are still a big concern for people, the rise in prices, especially for things we use every day, groceries, rent, electricity. All those prices are still climbing, and that's worrisome for people.
Food prices aren't going up as fast as they had been, but they're not coming down. And that's definitely worrisome for people. Can they stretch their paycheck far enough to cover the monthly bills?
Saliby: We also, of course, talk a lot, hear a lot about tariffs. Is there a sense at this point where we know who is seeing the most impact. Is it foreign businesses? Foreign governments? Domestic businesses? Consumers?
Horsley: Yeah, I don't think, by and large, it's foreign businesses and foreign governments. The bulk of the tariff bill so far seems to be paid by domestic importers, that is businesses here in the US that are bringing goods into the country from overseas.
And in some cases, those costs are being passed on to consumers, but we haven't seen all the costs passed along yet. I think the assumption is that over time, more of those tariff costs will be paid by the end consumers. To be sure, some are being absorbed by foreign suppliers, but most of them right now are being borne by the businesses in the U.S. that are bringing goods in.
Horsley: As you talked about jobs numbers earlier, I'm wondering what you report on is very specific and very detailed. It might be hard for somebody who doesn't know as much about economics to understand, do you feel like there's a bigger rise in misinformation as these numbers get interpreted, reinterpreted, misinterpreted?
Horsley: Well, there's no shortage of misinformation out there. Maybe it's deliberate, maybe it's accidental, but there's no shortage of wrong information out there. But look, everybody lives their own economy. Everybody has their own experience at the workplace, at the supermarket, so I'm not going to tell anybody if they're experiencing something that feels a little different than what the official data suggests, that they're wrong.
It's also the case that people tend to filter their views on the economy very much through partisan lenses. So for example, we see Republicans now feeling better about the economy than Democrats, and it was the opposite a year ago. And that's been very true for a long time now, where people tend to kind of look at the economy through rose-colored glasses, and then when the person in charge of the White House changes, they change their lenses and see the economy somewhat differently.
Saliby: We've been following this story about Federal Reserve Governor Lisa Cook because of her connections to Michigan. Why do you think she's become this focal point in this power struggle over interest rates?
Horsley: Well, I think the Trump administration has just been sort of casting a dragnet, looking for people with mortgage issues, that they can hold up in a negative light. So that's that's part of it, but that's just part of a bigger campaign that the the Trump administration has been waging to sort of exert more control over the Federal Reserve, even though the Fed was set up to be kind of independent of that kind of pressure from the White House.
And Lisa Cook right now is battling in court to hang on to her job, not only for her own sake, but really to just defend the integrity of the Federal Reserve as an independent actor from pressure from the White House. We'll see how that plays out. I suspect, ultimately, it's going to be something that goes all the way the Supreme Court.
Saliby: I think another big concern on a lot of people's minds right now is the potential for a recession. Are signs pointing to that happening anytime soon?
Horsley: I think the forecasters, the professional forecasters, the people who have money on the line, generally, don't think we're headed for a recession, but I do think the risks of a recession are higher now than they were, say, a year ago.
And the thing is, even if we don't technically go into a recession, the difference between growing at a 10th of a percent per year versus shrinking at a 10th of a percent per year doesn't mean that much to the ordinary person. If the economy is growing slowly or shrinking or just kind of in a slump, whether it's a technical recession or not, that doesn't feel very good.
I think we're definitely closer to that slumpy kind of economy than we were part, the combination of slow job growth and prices continue to go up. It's not as robust an economy as we were looking at a year ago.
Saliby: To end our conversation, is there something, as an economics reporter, that you look at that's maybe surprising to people, that kind of gives you a gauge on how the economy is doing? Is there a cheat sheet or a tip that you like to look at?
Horsley: Well, I mean, I try to look at all the objective, real data, so that I'm grounded in something I can hang my hat on. But I also just talk to people. I ask people all the time, what are you feeling good about? What are you feeling apprehensive about?
And I think those human stories of people's sort of subjective assessment of the economy, ultimately, are what add up to the bigger economy. You can't eat GDP. And even, we had, we had several years in the Biden administration where there a lot of the official numbers looked really good, and people were still in a funk and and it's pretty hard to escape that.
Saliby: Scott Horsley is NPR's Chief Economics Correspondent. Thank you for joining me.
Horsley: Great to talk with you.
This conversation has been edited for clarity and conciseness.
