The U.S. economy shrank for the first time since the pandemic lockdown in recession in the first half of 2022.

The current economy: We’re seeing a decline in economic growth, an accelerating rise in prices, and a decline in disposable income. If the trend continues, Americans may see stagflation—a phenomenon caused by slow growth and rising prices.

How consumers feel: Most Americans are unhappy with the economy, feel poorer, and spend savings accumulated during the pandemic. As real wages continue to decline because of inflation, trends of cutting back on spending could tip the economy into a recession.

President Joe Biden’s role: The White House should be focusing on avoiding anti-growth policy shocks, like tax increases and high spending. They are doing the opposite.