Parents, friends, and colleagues. Then the media, politicians, and big data. Every entity surrounding us seems to scream in unison that our economy is doomed. Even very recently, we witnessed thousands of articles about inflation tenaciously pour into the mainstream to persuade us that the only finale we and future generations have to face is an economic catastrophe. Still, this allegedly “realistic” scenario about the future is rather harsh and fortunately, unfeasible.

Before we start, the apprehension regarding the economy is not ludicrous. The stock market situation certainly wasn’t the rosiest, and individuals and businesses were hurt by surging interest rates as a wave of inflation hit the world. But once we take a more comprehensive stance in evaluating the global economy, it becomes evident that our economy is far from doom.

The crux of this stance is that we have higher expectations for the economy. The global GDP has increased from 1.39 trillion USD in 1960 to 96.1 trillion USD in 2021, with occasional dips that recovered within a few years at most. The poverty headcount ratio is lower than ever. People are richer in general, bask in higher economic standards, and want the economy to be growing more when, in truth, it already is. Even amidst the recession caused by the pandemic, economic growth is projected to be 3.2%, according to the International Monetary Fund. UNCTAD (United Nations Conference on Trade and Development)’s statistics elucidated an unprecedented level of global trade of 28.5 trillion USD in 2021, which is 13% higher than in pre-pandemic 2019. Many other reputed parameters for economic growth point to the progression of the global economy — at this point, are our concerns really substantiated? Isn’t our pessimistic judgment an outcome of our elevated expectations of the economy? 

It is also apparent that we have underestimated the capacity of our economy to withstand significant pressures. The levels of GDP and international trade have both surpassed their pre-pandemic state. The global unemployment rate that had momentarily surged to 6.6% in 2020 due to COVID-19 is on its decline, and Goldman Sachs estimates the customer cash flow to bounce back by 6% by the second half of 2023. The stock market is now saturated with major businesses and educated investors, meaning that individuals are no longer able to manipulate the market, unlike in previous economic crises such as the 1929 Wall Street Crash. This implies that the stock market is much more stable and resistant to factors that might affect it. The strengthened government regulations, which were virtually impotent in the past, also cushion major stock market crashes.

Another consideration is the stability of the US economy. The US accounts for nearly a quarter of the global GDP, and the US dollar is the world reserve currency predominantly utilized in the global trade markets. So, how’s the US doing? 

In August 2022 alone, the US labor market saw a growth of 315,000 new jobs and the unemployment rate was at 3.7%, only 0.2% above the pre-pandemic level of 3.5%. Even the 0.2% increase is due to almost 800,000 people newly entering the workforce rather than the weakness of the labor market. This means that more than 90% of the jobs lost during the first few months of the pandemic are now recovered. Consumer spending and corporate profits also remained strong amidst the inflation; the latter, especially, marked a record high in the second quarter of 2022. All of these serve as buffers to the inflation, as Aneta Markowska, the chief economist at Jefferies, agrees. She added that economic recession is unlikely when its most prominent indicator — unemployment — is not effectual. 

The COVID-19 pandemic and the Russia-Ukraine conflict hurled blows to the economy that made it impossible for people to feel safe about the economy. The stagnation in some areas of the economy is also a reality. Yet, the rebound from the pandemic and post-conflict recessions is already taking place, as indicated by the recovery of the GDP, steadying inflation, and stable consumer spending. The global economy, although at a slow pace, is continuously growing. The economy of the US, which has the greatest impact on the economies of the other countries, remains stable, reducing the possibility of an imminent global economic crisis. Inflation is not only in our economy but also in our concerns towards it — the contagion of anxiety prevails due to negative interpretations of the economic status quo. In view of optimistic pointers that persist, holding on to the inflated worries might not be the wisest choice.