Despite dire predictions of a widely expected recession in the U.S., the economy for now remains strong. Americans are contending with inflation and rising interest rates, worried about tech industry layoffs in particular, and feeling little confidence about where the economy is headed. Among CEOs, confidence is even worse.
Yet, as gloomy as the mood is, the economy is strong on many fronts and there’s a distinct possibility of a “soft landing,” as the Biden administration is quick to remind Americans. Brian Deese, top economic adviser to President Joe Biden, said last month U.S. economy has enough “strength and resilience” to shield it from a recession.
It can be a bit disorienting, with strong economic numbers like low unemployment on the one hand and stressful predictions and worrying layoffs on the other.
Meanwhile across the pond it’s been a difficult year in Britain, one marked by political chaos, the death of a beloved queen, and stubbornly high prices that have made it hard for many families to get by.
Things won’t be getting easier anytime soon, according to a report from the Office for Budget Responsibility released Thursday. The nation has fallen into a recession that will last more than a year. Once rising prices are considered, it said, household disposable incomes will fall 4.3% in the current financial year and 2.8% in the next one.
The cumulative 7.1% decline over the two-year period would be the “biggest fall on record” for household disposable income per person, tweeted Paul Johnson, director of the Institute for Fiscal Studies, an economics research institute in the U.K. He called the numbers in the OBR report “simply staggering.”
U.K. inflation hit 11.1% in October, a 41-year high due primarily to surging household energy bills and food prices, the Office for National Statistics said on Wednesday.
The OBR now predicts the economy will contract 1.4% next year, whereas in March it expected growth of 1.8%.
“The medium-term fiscal outlook has materially worsened since our March forecast due to a weaker economy, higher interest rates, and higher inflation,” the OBR said Thursday.
The expected slump will erase the growth in living standards seen over the past eight years, effectively turning the clock back to 2013, said the government’s forecaster.
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This story originally Appeared on Fortune