The White House is sure the economy is not in a recession nor headed for one. Wall Street is pretty sure there is no recession now, but isn’t as positive about what’s ahead.

Looking at the data, the picture is indeed nuanced. Nothing right now is screaming recession, though there is plenty of chatter. The jobs market is still pretty good, manufacturing is weakening but still expanding, and consumers still seem fairly flush with cash, if somewhat less willing to part with it these days.

So with second-quarter GDP data due out Thursday, the question of whether the economy is merely in a natural slowdown after a robust year in 2021 or in a steeper downturn that could have extended repercussions, will be on everyone’s mind.

“This is not an economy that’s in recession, but we’re in a period of transition in which growth is slowing,” Treasury Secretary Janet Yellen told “Meet the Press” on Sunday. “A recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that.”

On Monday, Kevin Hassett, head of the National Economic Council during the Trump administration, pushed back on that view, and said the White House was making a mistake by not owning up to the realities of the moment.

“We’re … kind of in recession, right? So it’s a difficult time,” Hassett, who is now a distinguished senior fellow at the Hoover Institution, told CNBC’s Andrew Ross Sorkin during a live “Squawk Box” interview.

“In this case, if I were in the White House I would not be out there sort of denying it’s a recession,” he added.

If nothing else, the economy stands at least a fair a chance of hitting the rule-of-thumb recession definition of two consecutive quarters with negative GDP readings. The first quarter saw a gross domestic product decline of 1.6% and an Atlanta Federal Reserve gauge is indicating the second quarter is on pace to hit the same number.

Wall Street, though, is seeing things a little differently. Though multiple economists, including those at Bank of America, Deutsche Bank and Nomura, see a recession in the future, the consensus GDP forecast for the second quarter is a gain of 1%, according to Dow Jones.

Whether the U.S. skirts recession will mostly rest in the hands of consumers, who accounted for 68% of all economic activity in the first quarter.

Recent indications, however, are that spending retreated in the April-to-June period. Real (after-inflation) personal consumption expenditures declined 0.1% in May after increasing just 0.2% in the first quarter. In fact, real spending fell in three of the first five months this year, a product of inflation running at its hottest pace in more than 40 years.

It’s that consumer inflation factor that is the U.S. economy’s biggest risk now.

While President Joe Biden’s administration has been touting the recent retreat of fuel prices, there are indications that inflation is broadening beyond gasoline and groceries.

In fact, the Atlanta Fed’s “sticky” consumer price index, which measures goods whose prices don’t fluctuate much, has been rising at a steady and even somewhat alarming pace.

The one-month annualized Sticky CPI — think personal care products, alcoholic beverages and auto maintenance — ran at an 8.1% annualized pace in June, or a 5.6% 12-month rate. The central bank’s flexible CPI, which includes things such as vehicle prices, gasoline and jewelry, rose at a stunning 41.5% annualized pace and an 18.7% year-over-year rate.

One argument from those hoping that inflation will recede once the economy shifts back to higher demand for services over goods, easing pressure on overtaxed supply chains, also appears to have some holes. In fact, services spending accounted for 65% of all consumer outlays in the first quarter, compared to 69% in 2019, prior to the pandemic, according to Fed data. So the shift hasn’t been that remarkable.

Should inflation persist at high levels, that then will trigger the biggest recession catalyst of all, namely Federal Reserve interest rate hikes that already have totaled 1.5 percentage points in 2022 and could double before year-end. The rate-setting Federal Open Market Committee meets Tuesday and Wednesday and is expected to approve another 0.75 percentage point increase.

Fed monetary tightening is causing jitters both on Wall Street, where stocks have been in sell-off mode for much the year, as well as Main Street, with skyrocketing prices. Corporate executives are warning that higher prices could cause cutbacks, including to an employment picture that has been the main bulwark for those who think a recession isn’t coming.

Traders expect the Fed to keep hiking its benchmark rate through the end of the year, taking the fed funds level to a range of about 3.25%-3.5%. Futures pricing indicates the central bank then will begin cutting by the summer of 2023 — a phenomenon that wouldn’t be uncommon as history shows the Fed usually starts hiking less than a year after its last cut.

Markets have taken notice of the tighter policy for 2022 and have started pricing in a higher risk of recession.

“The more the Fed is set to deliver on further significant hikes and slow the economy sharply, the more likely it is that the price of inflation control is recession,” Goldman Sachs economists said in a client note. “The persistence of CPI inflation surprises clearly increases those risks, because it worsens the trade-off between growth and inflation, so it makes sense that the market has worried more about a Fed-induced recession on the back of higher core inflation prints.”

On the bright side, the Goldman team said there’s a reasonable chance the market may have overpriced the inflation risks, though it will need convincing that prices have peaked.

Financial markets, particularly in fixed income, are still pointing to recession.

The 2-year Treasury yield rose above the 10-year note in early July and has stayed there since. The move, called an inverted yield curve, has been a reliable recession indicator for decades.

The Fed, though, looks more closely at the relationship between the 10-year and 3-month yields. That curve has not inverted yet, but at 0.28 percentage points as of Friday’s close, the curve is flatter than it’s been since the early days of the Covid pandemic in March 2020.

If the Fed keeps tightening, that should raise the 3-month rate until it eventually surpasses the 10-year as growth expectations dwindle.

“Given the lags between policy tightening and inflation relief, that too increases the risk that policy tightens too far, just as it contributed to the risks that policy was too slow to tighten as inflation rose in 2021,” the Goldman team said.

That main bulwark against recession, the jobs market, also is wobbling.

Weekly jobless claims recently topped 250,000 for the first time since November 2021, a potential sign that layoffs are increasing. July’s numbers are traditionally noisy because of auto plant layoffs and the Independence Day holiday, but there are other indicators, such as multiple manufacturing surveys, that show hiring is on the wane.

The Chicago Fed’s National Activity Index, which incorporates a host of numbers, was negative in July for the second straight month. The Philadelphia Fed’s manufacturing index posted a -12.3 reading, representing the percentage difference between companies reporting expansion vs. contraction, which was the lowest number since May 2020.

If the jobs picture doesn’t hold up, and as investment slows and consumer spending cools more, there will be little to stand in the way of a full-scale recession.

One old adage on Wall Street is that the jobs market is usually the last to know it’s a recession, and Bank of America is forecasting the unemployment rate will hit 4.6% over the next year.

“On the labor market, we’re basically in a normal recession,” said Hassett, the former Trump administration economist. “The idea that the labor market is tight and the rest of the economy is strong, it’s not really an argument. It’s just an argument that disregards history.”