A February survey by USA Today found that only 19% of respondents believed we are in an economic recovery, while 30% thought we were already in a recession. In this Motley Fool Live segment from "The Virtual Opportunities Show," recorded on April 5, Fool.com contributors Travis Hoium and Rachel Warren discuss the many factors that may be contributing to the current economic environment and consumer sentiment.
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Travis Hoium: I mean, I think generally the way that I have been thinking about the last six months is the, both Congress and the Fed are taking the punch bowl away. We're going to have to see what the outcome of that is. I don't think we're going to see it this quarter, next quarter. But you're starting to hear, on one of our shows we've talked about private market values are going down. Companies are basically anticipating a down round in private markets.
You've seen public companies that can't sustain themselves with their existing cash flow, have gotten an absolutely hammered on the market. When the free money goes away you, you figure out as Buffett said, who's swimming naked. In that's, I think what we're going to see over the next six months. But it's hard not to see some positive signs with wages going up. Obviously, unemployment is really low. Personally you see everything at the grocery stores seems to be more expensive, gas is more expensive. It's hard to think that that's not going to have an impact somewhere down the road. I just don't know what exactly that looks like. What do you think, Rachel?
Rachel Warren: I agree. I don't know that we're in for a recession in the near future. This is something we talk about a lot and I think it's an important discussion to have. None of us can predict the future, but I think it's possible. But I do think what's interesting to note as well as while consumer sentiment continues to be quite low, we're still seeing it's really strong influx and consumer spending. Job growth is looking really good, even though the labor force participation rate is still not where it was. One of the things that I've talked about a little bit recently on some previous shows has been this idea that you're seeing a real shift in the workforce and with a lot of workers are looking at contract or gig work, more flexible jobs. There are certain types of roles specifically like independent contractors, freelancers that are often not counted in those overall labor force participation numbers.
Some of that you may be seeing, some of these numbers that don't seem to quite add up, it could trace back to that. I do think inflation continues to be an overarching concern for businesses, for consumers. Obviously, as a consumer, you can be looking at the recent economic numbers and be like, "Well, that's great. But the items I'm getting at the grocery store are twice the price they were a year ago. When I go to fill my tank at the gas station, like it's quite a payday." I can understand how that would be something that is a hard pill to swallow.
What's interesting was there was a recent Forbes article that was talking about this basically saying we have a booming economy, but there's really bad feelings about it. There was a February survey that it referred to from USA Today that found that only 19 percent of respondents were saying that we are in an economic recovery, 30 percent thought we were already in a recession. I do think it's important to separate some of the health of the businesses we follow from the overall consumer sentiment that is clearly impacting a lot of these kinds of polls.
I think when we look at some of the businesses were following. I follow a lot of ones in tech, healthcare, e-commerce. You're seeing positive growth, I think in a lot of cases. But there is also the sense where I feel that there needs to be some kind of a normalization of expectations, we now may not be seeing that growth we did earlier on in 2021, in late 2020 in the pandemic recovery. I think that companies are taking stock of the current hiring market and they're seeing that they have to really step up their game to not only attract but retain workers. They have to invest in their supply chain. Inflation is an issue for these big companies as well, and so I think all of that is leading to just a different picture with the state of some really great companies perhaps over the next year or so. It doesn't mean they can't return to those levels of growth, but I think all of these factors create a little bit of a perfect storm. I do think there's going to need to be a little bit of normalization from investors in expectations moving forward.