US economy: Experts fear US could slide into recession if spending continues to slow


Despite positive unemployment figures and the end of almost all pandemic-related restrictions, the The US economy is heading for the rocks. Inflation, currently at 8.3% year-on-year, threatens to halt economic progress. Prices for some of the most needed staples are at record highs, such as fuel and grain, with no clear end date for when things might improve.

The Federal Reserve kicked off its inflation-fighting plan by raising interest rates, though that isn’t expected to have a major effect on prices until 2023. The president himself has little to no powers to prevent it, especially since many factors remain external. of government control. While war still rages in Ukraine, some of the world’s most important products are stuck behind a blockade or sanctions. Many experts predict a recession.

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How likely is a recession?

A recession is when there are two consecutive quarters of negative economic growth along with high levels of unemployment. The last time the United States experienced a recession was in 2020, when businesses were closed and workers laid off as the covid-19 pandemic tore the United States apart.

Since then the the economy is on a positive trajectory with unemployment levels similar to pre-pandemic levels. However, the rate of inflation could cause a slowdown as consumers stop spending their money due to prices. Rising interest rates will also hit the general economy in an attempt to stop inflationary pressures.

Recessions are hard to predict. However, with growth falls to minus 1.4% in the first quarter, the probability of a further slowdown is high. Inflation may have slowed by two percentage points last month, but prices are much more expensive than a year ago.

What did the experts say?

Various economists have spoken to media over the past week to discuss the challenges facing the US economy.

We expect a recession by the end of next year, but that wasn’t the start,” the bank’s chief U.S. economist, Matthew Luzzetti, told CBS News, referring to the decline in growth in the first quarter. “We think we will see strong growth the rest of this year.”

Another economist, Aneta Markowska, chief economist for Jefferies, an investment bank, was more positive in her belief that a recession won’t happen this year.

“I just don’t see what would cause companies to do a full 180 and go from ‘We have to hire all these people and we can’t find them’ to ‘We have to fire people,’” Ms Markowska said. . .


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