With the midterm elections approaching, President Joe Biden has little choice but to talk up the economy. Unfortunately, the economy is looking increasingly gloomy, despite the many valiant attempts to argue otherwise.

The first (and most wishful) argument is that inflation, far from setting a 40-year record, is already falling: specifically, that a lag in reporting the data is obscuring the fact that inflation is lower than the government says. This is what Paul Krugman means when he criticizes “official measures of inflation.”

His core argument is twofold. One, the most worrying component in inflation is rents (which the Bureau of Labor Statistics uses to measure the cost of housing). Two, rents across the country have already peaked. There is reason to believe both those statements are true—but they have little to do with each other.

While housing costs are by far the largest component of the Consumer Price Index, they are not rising any faster than overall inflation. Krugman even posts a chart showing that median inflation has tracked housing inflation for years.

But the very definition of median is that there are as many data points above it as below. Housing isn’t some outlier that is distorting inflation; it is a central component that is being driven up by the same basic forces.

In fact, what makes the rise in housing costs so troubling is that, since only a fraction of tenants move every year, increases in the average rent paid have a significant lag. Even as rental listing prices fall, the rise over the last year has been so strong that many existing tenants will still face a hefty increase when their leases come up for renewal.

This means that housing costs as measured by the BLS lag behind rent indexes created for the industry. So even while rental listing prices are decreasing, they are still running far ahead of the BLS’s measure, and the BLS’s lag—which will bleed slowly into inflation figures over the coming quarters—is responsible for the difference.

Another argument is that declining home values will encourage homeowners to cut back on spending. This argument is more tenable in theory, but in practice it’s not likely to reduce inflation.

For the most part, home prices support (or undermine) consumer spending through something called mortgage equity withdrawal. That is the difference between the total amount of principal homeowners pay off each month and the total amount of new debt they take on through home-equity loans or cash-out refinancing.

Mortgage equity withdrawal was a factor in transmitting the housing crash of the mid-aughts to the larger economy. But the total value of withdrawals in 2006 was twice what it is today despite an economy that is 80% larger. The sudden drop in home prices also led lenders to rapidly tighten credit requirements, reducing the number of homeowners eligible for home-equity loans or cash-out refinancings.

Credit standards are far higher today than they were during the early 2000s, and on average potential borrowers are going into this housing crunch with much healthier balance sheets. The implication is that home-price declines will not necessarily lead to a big reduction in consumer spending.

There is one final, intriguing factor that indicates the U.S. may not be done with inflation: The large declines in stock prices could spur hiring freezes by executives eager to prop up overall earnings growth. The U.S. job market is currently as tight as it has ever been, with nearly two job openings per unemployed worker.

Larry Summers cites this this tightness—and the associated levels of wage growth—in his argument that inflation can’t be brought down without a recession. (Summers is a paid contributor to Bloomberg Television.) That’s because a looser labor market typically comes about through a rise in layoffs. Potential layoffs lead workers to accept smaller or nonexistent raises and cut their own spending.

Right now, however, the number of unemployed workers per job opening could triple without a rise in layoffs. That would dramatically ease employers’ difficulties in hiring workers, but it’s unclear how it would affect existing workers’ wage demands or spending habits.

On the one hand, layoffs are much more threatening to most workers than a decline in job openings. On the other, a sharp drop in openings could shift the labor market back to the equilibrium it was in just before the pandemic, when unemployment wasn’t much higher but inflation and wage growth were both contained.

In any case, it’s clear that, with prices rising at near-record levels, traditional inflation-fighting tools will continue to be necessary. So workers may soon have to accept that a full-blown recession—with rising layoffs and unemployment—is unavoidable.

Karl W. Smith is a Bloomberg Opinion columnist. Previously, he was vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina.