Is the U.S. spending its way out of a recession?

Added: 2026-05-30

[00:00:00]Welcome back everybody. Half past the hour on your Friday morning. Let's talk money. Despite inflation, Americans are spending money faster than they can earn it, but it may be keeping the economy afloat. NewsNation national correspondent Alicia Menendez checks in on the state of economy for us. Alicia, are we spending our way out of a recession or how would you describe the state of things?

[00:00:21]>> Yeah, good morning Mark. I mean in many ways I think that's a pretty accurate description when you look at the economy. 70% of it is reliance on consumer spending and the data showing that that people are spending. It's why most economists will tell you right now that the economy is showing the surprising amount of resilience, but there is this undercurrent of growing strain and we're starting to see that in the data. The pain points that Americans are feeling. In the last 24 hours we got this latest PCE index. That is the Fed Federal Reserve's, you know, go-to inflation measure and it shows the highest rise in inflation in 3 years with prices for goods and services.

[00:00:55]Those are up nearly 4% compared to a year ago. That is double the Fed's preferred rate for inflation. At the same time, and this is what you're getting to, personal savings, those are down almost half of what they were a year ago, meaning people are tapping more into their savings to buy the things they need because their dollar is not going as far. And insult to injury here, I guess for Main Street is, you know, you look at Wall Street and they're nearing record highs overshadowing some of those pain points for Main Street. And you know, Thursday's revised GDP, this is the measure of the overall economy. It estimates that for the first quarter of this year we did show growth, 1.6%, but that is down from the initial estimate of 2%, meaning the economy isn't growing as strong as it seemed last month, but as long as it's technically not shrinking, we don't have negative GDP quarter to quarter, we're not in a recession. You know, addressing some of the concerns that Main Street is having, Treasury Secretary Scott Pason spoke with our Libby Dean and he says that all will ease out soon, that relief is on the horizon.

[00:01:54]>> When can Americans, the average American, and can the US economy work for the average American without a deal with Iran?

[00:02:02]>> Again, I I believe we've already seen oil prices come down substantially.

[00:02:08]We are pumping more oil than we've ever seen before. And as I said, these are short-term challenges that we will get over and I think we'll move forward.

[00:02:21]>> Yeah, and in the last week or so, we have seen oil prices come down that has trickled down to gas prices at the pump falling. You know, more than 15 cent this week down from 456 last week to 439. If the tentative peace deal with Iran, and that's going to be critical, that goes through, we could see gas prices be the first to fall. That would be a lot of relief to a lot of Americans. But as we've talked about in the past, Marci, the most oil analysts say it really could take months before we see prices go back to where they were before the war. That's what we've seen in the past kind of oil supply disruptions. It's going to take though even longer for prices at the grocery store and beyond those to come down. And really because of where inflation is at, it's so important to point out that it's unlikely you got this new Fed chair Kevin Warsh. There's been a lot of optimism he's going to be able to cut rates, but it's really unlikely he's going to be able to do that anytime soon because of these inflation numbers. In fact, there are a growing number of Fed governors and and those on the FOMC who are actually now looking more toward a rate hike to ease inflation faster. That could be painful, but it might just be kind of what we need, Marci.

[00:03:21]>> Thank you for watching. Subscribe below and download our NewsNation app right now on your phone and you will get fact-based unbiased news for all Americans.