Pseudo-Recession Panic: Are Political Elites Fueling Economic Doubt?

Paul Riverbank, 12/31/2025Is America’s economy booming or busting? Explore the data, doubts, and 2026 election stakes.

If you've been through a few election cycles, you might remember 1992. Back then, politicians and talk radio hosts alike proclaimed a national funk. The data? By election day, economic growth had rebounded sharply—over four percent GDP gains, low inflation, jobless figures trending down. Despite that, the Clinton campaign's famous “It’s the economy, stupid” slogan stuck, and the perception of economic pain carried enormous weight. Victor Davis Hanson dubbed this the pseudo-recession: where collective anxiety, not spreadsheet math, drives headlines.

Fast-forward to today. The latest numbers—just released—paint a rosy scene. A 4.3% GDP leap in the third quarter. Gas prices tanking. Torsten Slok at Apollo points out that the overall price index rose 26% since before the pandemic, but typical American pay rose even higher, at 30%. By most objective yardsticks, workers are slightly better off. Jason Furman at Harvard cut this to the chase recently: “Everyone wants prices lower, but they wouldn’t trade their paycheck for 2019’s numbers.”

Still, something's off—the story feels more complicated. And in politics, feelings summarize themselves at the voting booth.

Why the downbeat mood, then? The answer, as it often is in America, comes down to who gets what. The bulk of wage gains show up in the bank accounts of higher earners. The top wage quartile saw income advance 4.5%, comfortably trumping inflation, while lower earners eked out just 3.5%. That number, once adjusted for living costs, barely moves the needle. Economist Cory Stahle put it bluntly: the tide is rising, but some boats remain heavy in the water.

It isn’t just pay stubs; consumer spending tells the tale too. Bank of America’s recent data divides the country’s wallets into thirds. Top-tier earners’ spending climbed nicely—about 4% this year. The lower third? Growth has barely budged. This unevenness gives us the so-called “K-shaped” recovery: a country cruising ahead for some, trailing behind for others.

The kitchen table conversations reflect this. Folks a rung or two down from the top read headlines about cheaper gas, then wince at grocery bills or apartment rents that haven’t budged. No wonder “affordability” won’t leave the news cycle. Even as mass layoffs and economic shrinkage remain essentially nonexistent—the classic signs of recession are nowhere in sight—the day-to-day headaches feel immediate and real.

Peel back another layer. Job creation has slowed, especially outside of health care. Parts of American manufacturing have shed positions, and while overall unemployment is low by historical standards (4.6%), those who do lose work are finding the hunt tougher than in previous years.

And yet the U.S. economy, defying skeptics, has an odd resilience. Joe Brusuelas, an economist I trust, calls it dynamic to the point of being “a resilient beast.” Recent legislative packages and the latest trims in interest rates give policymakers a few extra levers heading into the next cycle.

All of this, of course, collides in the campaign arena. Some candidates harp on the idea of “pseudo-recession,” betting that public qualms outweigh the latest statistics. Their opponents lean on falling fuel prices, surging investment, and a job market historically strong—hoping logic wins over anxiety. If past is prologue, the victor might well be the side that nails this emotional undercurrent, not just the ones who bring their charts.

Maybe, in the end, the lesson echoes across decades: American economic life is usually more intricate than it seems online or on cable panels. Good times and frayed nerves can coexist. The task for leaders (and anyone listening) is to keep an honest eye on both the data and the doubts. The real story—the one that shapes ballots—has always intertwined facts and feelings. The challenge is seeing both with clear eyes as the nation barrels toward another consequential vote.

Something odd is happening on Main Street and in the halls of power: the numbers say America's economy is firing on all cylinders, yet a nagging sense of unease persists. With the 2026 elections on the horizon, this disconnect between the data and public mood is more than a curiosity—it's shaping the battle for hearts and votes.If you've been through a few election cycles, you might remember 1992. Back then, politicians and talk radio hosts alike proclaimed a national funk. The data? By election day, economic growth had rebounded sharply—over four percent GDP gains, low inflation, jobless figures trending down. Despite that, the Clinton campaign's famous “It’s the economy, stupid” slogan stuck, and the perception of economic pain carried enormous weight. Victor Davis Hanson dubbed this the pseudo-recession: where collective anxiety, not spreadsheet math, drives headlines.Fast-forward to today. The latest numbers—just released—paint a rosy scene. A 4.3% GDP leap in the third quarter. Gas prices tanking. Torsten Slok at Apollo points out that the overall price index rose 26% since before the pandemic, but typical American pay rose even higher, at 30%. By most objective yardsticks, workers are slightly better off. Jason Furman at Harvard cut this to the chase recently: “Everyone wants prices lower, but they wouldn’t trade their paycheck for 2019’s numbers.”Still, something's off—the story feels more complicated. And in politics, feelings summarize themselves at the voting booth.Why the downbeat mood, then? The answer, as it often is in America, comes down to who gets what. The bulk of wage gains show up in the bank accounts of higher earners. The top wage quartile saw income advance 4.5%, comfortably trumping inflation, while lower earners eked out just 3.5%. That number, once adjusted for living costs, barely moves the needle. Economist Cory Stahle put it bluntly: the tide is rising, but some boats remain heavy in the water.It isn’t just pay stubs; consumer spending tells the tale too. Bank of America’s recent data divides the country’s wallets into thirds. Top-tier earners’ spending climbed nicely—about 4% this year. The lower third? Growth has barely budged. This unevenness gives us the so-called “K-shaped” recovery: a country cruising ahead for some, trailing behind for others.The kitchen table conversations reflect this. Folks a rung or two down from the top read headlines about cheaper gas, then wince at grocery bills or apartment rents that haven’t budged. No wonder “affordability” won’t leave the news cycle. Even as mass layoffs and economic shrinkage remain essentially nonexistent—the classic signs of recession are nowhere in sight—the day-to-day headaches feel immediate and real.Peel back another layer. Job creation has slowed, especially outside of health care. Parts of American manufacturing have shed positions, and while overall unemployment is low by historical standards (4.6%), those who do lose work are finding the hunt tougher than in previous years.And yet the U.S. economy, defying skeptics, has an odd resilience. Joe Brusuelas, an economist I trust, calls it dynamic to the point of being “a resilient beast.” Recent legislative packages and the latest trims in interest rates give policymakers a few extra levers heading into the next cycle.All of this, of course, collides in the campaign arena. Some candidates harp on the idea of “pseudo-recession,” betting that public qualms outweigh the latest statistics. Their opponents lean on falling fuel prices, surging investment, and a job market historically strong—hoping logic wins over anxiety. If past is prologue, the victor might well be the side that nails this emotional undercurrent, not just the ones who bring their charts.Maybe, in the end, the lesson echoes across decades: American economic life is usually more intricate than it seems online or on cable panels. Good times and frayed nerves can coexist. The task for leaders (and anyone listening) is to keep an honest eye on both the data and the doubts. The real story—the one that shapes ballots—has always intertwined facts and feelings. The challenge is seeing both with clear eyes as the nation barrels toward another consequential vote.