There has been a 10% decrease in the chance of a recession from the projection in early spring. The Early projection of a 35% chance that there will be recession in the economy was made after the failure of Silicon Valley Bank in March. With recent moves in an agreement to raise national debt limit, the economy is projected to remain unchanged over the next 2 years. A main issue that is not completely certain is if the Fed will have to create a recession in order to bring inflation back to it's the targeted 2%. A key factor of this is if the labor market can rebalance or not. Unemployment has had a slight increase of .2 since the start of COVID-19 but is pretty much back to normal. The past year the economy has been able to create ways where jobs opportunities are increasing while keeping the unemployment rate at a "good" standard. Overall, even though there is still a decent chance the United States goes into a recession in the next couple of years, it seems to have become less and less likely as time passes.
Why a US recession has become less likely (goldmansachs.com)
This still means that we have a 25% chance of a recession which yes is better than 35% but still 1/4 does not seem like great odds. I think if the Government stopped spending money that would help bring inflation down. The article I read said that our money supply growth rate is decreasing and that trend would not help us stay out of a recession because that would mean we have no money honestly. As I am a senior and want to one day soon get my own home these topics make me think about the hardship that might bring. I listened to a podcast and it said our grandparents could save and buy a house a couple years into working but now our generation just spends our paychecks and saves little because we know that buying a house is out of the picture when you are in the middle class unless you want to save for years on end. And then there are also the high mortgage rates that we have that our grandparents did not have. This all makes me wonder what the financially smart thing to do is once I graduate.
ReplyDeleteThese insights into the economic landscape are helpful for attitudes regarding the future of the economy. As a new college student looking for opportunities to get involved in potential new internships it is important to me that a recession now seems less likely. Albeit 25% chance of a recession is still high it is comforting to know that it is getting lower. Inflation will remain an issue for some time it seems and possible solutions could be lowering government spending but that now seems unlikely with the start of this new Israel-Hamas war.
ReplyDeleteRecently, I have seen that some job openings are very scarce for certain fields as there are fears of a recession especially in the financial sector. As Graham said, certain internships that may usually result in potential full time opportunities may be put on hold as there is a fear of a recession which may result in labor force layoffs and needs to save money and not invest in riskier investments.
ReplyDelete