America’s economy is wildly confusing right now. Here’s what’s really going on

Just 10 days ago, anxious markets were freaking out about the US economy, convinced that the recession we’ve avoided for three years was finally happening. It appears to have be a wild overreaction (amplified by some unrelated financial shenanigans) to a single report on the labor market.

Just 10 days ago, anxious markets were freaking out about the US economy, convinced that the recession we’ve avoided for three years was finally happening. It appears to have be a wild overreaction (amplified by some unrelated financial shenanigans) to a single report on the labor market. The whole episode illustrates the folly of obsessing about a single data point when trying to assess the state of America’s broad and complicated economy. Viewed on its own, the unexpectedly sharp rise in unemployment two weeks ago was a giant red flag. But the labor market didn’t just fall out of a coconut tree, as Vice President Kamala Harris might say. (It exists in the context of all in which we live and all that came before it.) The truth is the economy is in pretty solid shape, and no serious economists are talking about an imminent recession. The truth is also that people feel strapped, that housing has become unaffordable for millions of Americans and that prices are not coming down even as inflation cools. In the run-up to the election, politicians are going to seize on whichever economic narrative puts their agenda in the most favorable light. One way to do that is to zoom in on a single topic — supermarket prices, say — and steer clear of any contradictions or caveats that muddy the message. That’s politics. When you zoom out, the economy is telling its own story, and it is full of nuance.