Are We Already In a Recession?

Hi guys, I'm jumping in before our host Kara Perez to give you a

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I'm going to start this video off by being a little vulnerable.

In February 2026, I did not make enough money to pay all my bills.

I had to take $200 out of my savings in order to come out

even.

Now, this is not

because I'm bad with money

and this is not

because I balled out.

This is simply because life has gotten more expensive in 2026.

My property insurance went up by $30 a month,

my health insurance went up by $200 a month

because I am on the ACA

and our government decided to revoke our subsidies

and things like gas

and groceries and electric have just gotten more expensive.

So, the only thing

that hasn't gone up in 2026

so far is my income,

which means my 2025 dollars have to go further

and cover more and in February,

they just couldn't do that.

Hey all, I'm Kara Perez, founder of Kara Explores Money,

author of Money for Change.

Very excited to be back here on your TFD screens to ask the question

I think many of us are wondering,

which is are we in a secret recession?

And if we're not in a recession, why is everything so damn expensive?

No one in the government seems to want to make a call on this,

but those of us

that are boots on the ground living through these rising costs know

that we're in a pretty untenable financial situation here in the US,

even if we don't technically meet the definition of a recession, which is,

by the way, two consecutive quarters of declining economic activity.

That would include things like GDP, the stock market, trade, and consumer habits.

When I say the word recession,

probably what comes to mind for a lot of people is the Great Recession

of 2007.

But, recessions are actually part of the economic cycle of capitalism.

In fact, since the year 1900 there have been 24 recessions in the United

States,

including the Great Depression of the 1930s, the oil crisis of the 1970s,

and the dot-com crisis of the '90s.

And what is going on with the US economy?

Well, here are some numbers on where we stand.

Year-to-date, the stock market is down 6.79% as of filming,

and I'm filming this on March 30th, 2026.

Real gross domestic product, aka GDP,

increased at an annual rate of 1.4% in the last quarter of 2025.

Median individual income for a full-time worker in 2025 was $62,608.

Total consumer debt hit $18.8 trillion by the end of 2025,

and that includes all types of debt like auto loans, credit card debt,

and mortgages, which works out to about $105,056 of debt per US household.

Now, to me, as a money nerd,

that $105,056 in household debt is really interesting

because I want to compare it to the average household wealth.

In 2022, the average US white household wealth was $1.4 million,

while for black families, it was $211,596, and $227,544 for Hispanic families.

For Asian-American families, it was $1.8 million.

So, for black and Hispanic families in the United States,

nearly half of their household wealth is wiped out by household debt. 2025 was

a particularly brutal year for individual finances in the United States

because our current president really enjoys playing whack-a-mole with things like tariffs

and wars,

all of which serve to increase the average cost of living.

The situation in Iran is quickly developing.

As I'm filming this,

we are preparing to deploy 50,000 boots on the ground.

That means American lives on the ground in Iran to wage this new war.

And with this war comes major concerns about the costs of oil.

Now, zooming out for a second here,

the entire world lives in the oil economy.

We use oil for absolutely everything.

It's not just gas in your cars.

We use oil to do things like make polyester,

which eventually gets turned into clothing.

We use oil to transport all of the things

that we're buying in the stores.

So, if oil gets more expensive, everything else in the world gets more expensive.

But, beyond the insanity of 2025

and what feels like the insanity of 2026 thus far,

the United States has created and upheld a system where money flows upwards,

but it never flows downwards.

And many of us are beginning to feel the crunch

that a system like

that creates.

This flow of money upwards really got a huge push in the early 1980s

when Ronald Reagan was president.

Reagan cut both corporate and personal tax rates,

the latter falling from 70% to 50%.

He also decreased the highest capital gains tax rate from 28% to 20%.

This in turn meant that there's less tax income coming into the government,

which means there's less money for social programming,

which means that many Americans

that were struggling to put food on the table

or get child care,

or what have you, continue to struggle with those things.

And these tax cuts actually set the stage really nicely for something

that very few people saw coming in 1980,

which was the wealth

that would be created by the internet in the late '90s

and the early 2000s.

The internet has created many things,

and I have a lot of feelings on the good, the bad,

and the ugly of the internet.

But, what cannot be denied is

that it changed people's ability to create wealth in a huge way.

It is much easier

and much cheaper to build a business on the internet than to build a

brick-and-mortar business.

And you can have customers 24 hours a day, 7 days a week,

365 days a year from all over the world.

You are no longer limited to just who drives by your brick-and-mortar

or who's going to walk past your business.

The internet never closes and it never needs a sick day.

So, thanks to those lower corporate tax rates introduced in the 1980s,

internet-based companies have been able to generate

and retain wealth like truly we've never seen before.

It's the early 2000s where we began to mint our current crop of billionaires

that are frankly ruining all our lives in many ways.

Facebook was founded in 2004 and went public in 2012.

Reddit was founded in 2005.

Twitter was founded in 2006.

And Instagram was founded in 2010.

Now, the scale and the scope of the internet allowed these founders

and companies to create huge monopoly businesses.

But, it's the tax laws of the United States

that allows them to retain

that wealth.

We are currently living in a K-shaped economy.

That's where the economy has largely split into the haves and the have-nots.

You may have seen this statistic floating around the internet. 10% of earners in

the United States drive nearly 50% of all consumer spending.

That is not because lower-earning people have more self-control.

It's because lower-earning people largely cannot afford to participate in the economy anymore.

Now, I'm going to say two words

that are going to hit home with a lot of people.

Housing crisis.

For the last two decades,

housing prices and rent prices have been rising faster than incomes across most of

the United States.

Common sense and easy math tells us

that if your rent goes from $500 a month to $700 a month,

you now have $200 less to spend on everything from groceries

and gas to tickets to see a movie

or a vacation for your family.

And rising housing costs are a particular challenge for younger Americans who haven't had

a chance to save up any money

and who are less likely to have reaped a windfall like an inheritance.

And on the topic of not earning very much money,

let's talk about the fact that our minimum wage is still $7.25.

It has not been changed since the year 2009.

As of 2024, full-time workers earning the minimum wage cannot afford a one-bedroom apartment

anywhere in the United States.

A minimum wage worker's monthly income on the federal minimum wage would be $1,257

before taxes.

In October 2025, the national average rent was $1,558 a month,

according to apartments.com.

And almost 90% of households in the US

that earn $20,000 or less a year spend nearly 30% of their income just

on housing.

Now, I'm someone who actually has lived at that income level,

$20,000 or less a year.

For several years in my 20s, I made less than $20,000.

But I was able to make it work largely

because costs simply weren't

as high.

Shout out my Austin, Texas girlies watching this.

I lived in Austin, Texas when I was making less than 20K a year,

and I lived in 78704, which is the zip code right across the river.

So, all of those pictures you see of Austin,

you're seeing a lot of 78704.

And my rent at that time was 1250 a month,

and I had a roommate.

She paid a little extra

because she got the bigger bedroom with the bigger bathroom

and the bigger closet,

and I paid $500 a month.

I know the Austin girlies are watching this and being like,

"You paid 1250 a month in 78704?"

Like, yes, things used to be cheaper.

More and more Americans are losing access to their housing

because housing has gotten

so expensive.

Nearly 53% of unhoused people actually have a job.

They just don't make enough money at that job to afford housing.

So, this K-shaped economy

that we find ourselves in here in 2026 is born out of decisions

that we've been making for the last 80 years.

Take for example, the almost complete destruction of pension plans in favor of a

401k plan.

Pension plans used to be the default for workers in the United States,

and those have largely been replaced by 401k plans.

A pension plan is what we call a defined benefit plan,

meaning it is largely funded by the employer,

whereas a 401k is what we call a defined contribution plan,

meaning it's largely funded by the employee, the worker,

which means that employee has to divert money from their salary into the plan.

In 1989, the majority of workers were under a defined benefit plan.

Yet, in 2022, 83% of workers in a defined contribution plan vastly outnumbered a

fifth of workers in a defined benefit plan,

according to research from the Federal Reserve Bank of St.

Louis.

Another huge reason we're finding ourselves in the K-shaped economy is union busting.

Probably the most famous strike in recent memory,

and one that your parents are likely to remember, came in 1981.

The Professional Air Traffic Controllers Organization went on strike in August 1981

because they wanted better pay

and better working conditions.

Now, if you don't know,

air traffic controllers are the people who direct planes in the sky

and help them land safely

and not run into each other.

Air traffic controllers keep all of us safe,

and they are absolutely essential to the miracle of modern-day flight.

So, you might think that the government,

seeing these essential workers keeping all of us safe and moving around,

might have said, "Hey, absolutely.

You want a little bit more money?

Not a problem.

You do a really important job in society."

But, unfortunately, that's not what happened.

Instead, when striking workers refused to return to work,

then President Ronald Reagan ordered the FAA to fire them. 11,345 air traffic controllers

lost their jobs.

And while at the end of the strike, about 500 people were rehired,

the vast majority of workers who had gone on strike were banned from ever

working for a federal agency ever again.

That is a truly heartbreaking example of how we treat workers in this country,

and how we have worked to create systems and laws that funnel money upward.

And finally, something that I know all too well,

the cost of health care in this country is truly an abomination.

Most recently, as I mentioned at the top of this video,

we lost the ACA subsidies,

which is something that I personally will never forgive any elected official for.

On average, more than 20 million subsidized enrollees in the ACA,

the Affordable Care Act, saw their premium costs rise by 114% in 2026,

according to an analysis by the health care research nonprofit KFF.

Honestly, the thing about health care in the United States is

that it's entirely too chaotic,

because our government actually spends a ton of money on health care every year.

But so do individual Americans.

On a per capita basis, total health spending, including government, private, out-of-pocket,

research, and infrastructure spending,

has increased in the last five decades from $353 per year in 1970 to

$15,474 per year in 2024.

In constant 2024 dollars,

the increase was from $2,208 in 1970 to $15,474 in 2024.

That is bananas.

I'm currently paying $525 a month for my insurance,

which is a $200 increase from 2025.

That is just for me,

and I still have to pay out-of-pocket co-pays

when I go to the doctor. $36 to see my GP,

and it cost me, I think, $50 to see my specialist.

I have Crohn's disease,

so I got to hang out with a GI a lot.

And I also recently had to pay $125 to get a colonoscopy.

I mean, it is truly bananas.

It's absolutely insane.

And please sound off in the comments,

cuz I know I am not the only one whose health care shot up

this year.

Now, when we're talking about the state of the economy overall,

I also want you to add in how much the economy has simply expanded

in the last 50 years.

In 1970, there was no Amazon, there was no Starbucks,

there was no one-day shipping, there were simply fewer places to shop overall,

and certainly no online shopping.

So, in simple, real-life terms,

it was easier to hold on to your money

because there was just fewer places to spend it.

We have expanded the amount of things

that there are to buy tremendously in the last several decades in the United

States.

And we have also broken down the process in

which we buy things

and started charging people at every step of

that process.

Take, for example, buying a car.

It used to be that you would go out, you would buy a car,

you owned that car.

Now, you can buy a car, you pay one price for the car,

and then you can pay for upgrades for certain features,

or pay even more for monthly subscriptions like autopilot.

More than ever, our economy in the United States is not built on building

things,

and increasingly, it's certainly not built on creating things that are meant to last.

Take furniture, for example.

We simply do not build furniture to last decades anymore.

We are not using high-quality materials like real wood,

and instead are using things like particleboard.

This shelf behind me, I got it at Target before the boycott,

and this is flimsy as hell.

If you sneeze on this thing, it's going to go down.

Meanwhile, I have a wooden dresser in my bedroom

that is from the early 1980s

that I inherited from my grandmother,

and that thing is from Ethan Allen,

and it is solid oak all the way through.

That thing's going to outlive me.

This thing might not even make it to the end of the month.

In fact, our economy is increasingly reliant on you buying the same product multiple

times as it breaks down.

So, TLDR, we've been building an economy for the last several decades where it's

easier for the wealthy to keep a hold of their wealth

and harder for the average American to get out of debt

and build savings.

Now, what's really kind of twilight zone-y for me is how people are talking

about the economy.

In my working class and pretty left-leaning group of friends,

money is a constant topic.

My friends that are parents, for example,

are always talking about how expensive daycare and groceries are.

And my friends that aren't parents are really concerned about the price of gas.

And online, there seems to be endless discourse about how $120,000 a year is

basically living at the poverty line in a lot of different places in the

US.

But Trump, who, to be clear,

does not live in reality in any sense of that word,

continually insists from the White House that prices have gone down.

And Pam Bondi, quite infamously,

used the success of the Dow to defend herself against not releasing the Epstein

files.

But only 62% of Americans invest in the stock market,

according to a Gallup poll.

So, when the stock market does well,

it doesn't mean that every single American does well.

And also, the stock market is not the economy.

The stock market is a part of the economy,

but so too are things like jobs,

both the job creation and the job losses that we're experiencing.

Consumer spending is 70% of the economy.

And last year, the US economy added zero jobs.

So, when someone talks about the stock market doing well

and uses that as a barometer for look how good things are in the

US,

that is a huge red flag.

Now, as is often discussed on this channel,

and it's one of the reasons I love TFD so much,

being a smart and strategic shopper is a tool

that you can use to defend yourself against some of this wealth extraction.

But the wealth divide is

so great and the cost of living is now

so high that increasingly the only real solutions here have to be systemic.

We need stronger workplace protections.

We need to repeal laws that allow strikers to be punished by being fired.

We need higher taxes on the obscenely rich.

And we need more regulations on these ever-growing tech companies.

And I know that particularly in the last year,

it feels like our elected officials are at best doing nothing

and at worst actually trying to ruin your life.

But I did want to share a few things

that are in the pipeline to make all of our lives a little bit

better.

Senator Bernie Sanders from Vermont, ranking member of the Senate Committee on Health, Education,

Labor, and Pensions, and Representative Ro Khanna from California introduced the Make Billionaires Pay

Their Fair Share Act,

legislation that would establish a 5% annual wealth tax on the 938 billionaires in

the United States,

who are now collectively worth $8.2 trillion.

In its first year,

the bill would provide $3,000 direct payment to every man, woman,

and child in a household making $150,000 or yes,

which would be $12,000 for a family of four,

and use the estimated $4.4 trillion in revenue raised over the next decade to

address the most pressing crises facing working families.

In 2025, 16.5 million Americans were represented by a union,

which is an increase from 2024

and the highest number of Americans represented by a union in the last 16

years.

So, are we in a secret recession?

I think the data tells us that it's not so secret.

When we take a macroeconomic view,

we can see that there are serious problems in the US economy at the

moment.

In fact, as I'm filming this, Grandpa Moneybags, my nickname for Jerome Powell,

chair of the Federal Reserve,

literally just gave a talk where he said

that the national debt is rising substantially faster than the economy is expanding

and this will not be sustainable.

And without immediate and serious actions,

we will run into some very significant problems very soon.

So, even though none of our elected officials want to use the R word,

it doesn't mean that those of us out here in the streets aren't actually

living through a recession.

I'm going to paraphrase 1984 here.

The quote is something along the line of "The party's final command was to

ignore the evidence in front of your own eyes."

And it was their most important command, don't do that.

Don't let the people who have billions of dollars gaslight you into thinking we're

not living through a recession right now.

And don't let them gaslight you into thinking

that if you're struggling to pay your bills,

it's because you need to chill on the avocado toast

and not because they slashed your health care benefits.

And as a final thought,

I know that apathy is incredibly trendy right now

and it is very easy to doom scroll your way into spiraling out about

this.

But I really want to encourage you to get involved in some manner.

If we all decide

that there's nothing to be done

and that there's nothing worth fighting for,

then we automatically lose the fight.

There are lots of really amazing people doing work around these issues at every

single level.

So, you just need to find something

that you want to get involved with

and join in.