The great unrest: How 2020 changed the economy in ways we can't understand yet

cnbc.com:

In this article

In an earnings call Wednesday morning, Yum Brands CEO David Gibbs expressed the confusion many people are feeling as they try to figure out what's going on with the U.S. economy right now:

«This is truly one of the most complex environments we've ever seen in our industry to operate in. Because we're not just dealing with economic issues like inflation and lapping stimulus and things like that. But also the social issues of people returning to mobility after lockdown, working from home and just the change in consumer patterns.»

Three months earlier, during the company's prior call with analysts, Gibbs said economists who call this a «K-shaped recovery,» where high-income consumers are doing fine while lower-income householders struggle, are oversimplifying the situation.

«I don't know in my career we've seen a more complex environment to analyze consumer behavior than what we're dealing with right now,» he said in May, citing inflation, rising wages and federal stimulus spending that's still stoking the economy.

At the same time, societal issues like the post-Covid reopening and Russia's war in Ukraine are weighing on consumer sentiment, which all «makes for a pretty complex environment to figure out how to analyze it and market to consumers,» Gibbs said.

Gibbs is right. Things are very strange. Is a recession coming or not?

There is ample evidence for the «yes» camp.

Tech and finance are bracing for a downturn with hiring slowdowns and job cuts and pleas for more efficiency from workers. The stock market has been on a nine-month slump with the tech-heavy Nasdaq off more than 20% from its November peak and many high-flying tech stocks down 60% or more.

Inflation is causing consumers to spend less on