Is the US Already in a Recession? Economists Divided
Is the current economic climate indicative of a recession? Economists have differing opinions. According to Dana Peterson, the chief economist of The Conference Board (an economic think tank), there appears to be recessionary signs in the data. She states that a recession is expected. The indicators that we use to gauge economic activity suggest that it is happening presently.
A recent survey of CEOs in the U.S. found that most of them think a recession is coming or even that we might already be in one. US consumer price and retail sales data this week, however, showed persistent inflation and robust demand that risk prompting the Federal Reserve to raise interest rates even higher than previously expected.
January inflation figures being higher than anticipated led to some worries that the decrease in inflation, which is known as disinflation, had been put on hold. Tuesday's inflation report revealed that annual consumer prices had risen more than predicted, indicating that the economy was resisting the Federal Reserve's attempts to slow it down.
As per the Commerce Department data released on Wednesday, retail sales went up by 3 percent in January, which is the largest monthly increase in nearly two years. Retail purchases overall saw a 3% rise in January, the largest growth since March 2021, as reported by the Commerce Department. The figures are not taking inflation into account. Motor vehicle dealers, furniture stores and restaurants were the main drivers of the increase in all 13 retail categories last month.
Governments placing further restrictions on services trade are making it increasingly difficult for the global economy to recover from the aftereffects of the Covid pandemic and the war in Ukraine. The OECD index showed that new measures across all sectors had an average increase of five times in 2022 compared to the year before.
Household finances are feeling the strain of increasing borrowing costs and continued price hikes, resulting in debt levels that are now the highest they have been in twenty years.
Data from the United States continues to be better than expected. It does not seem as though the Federal Reserve's attempt to reduce consumer demand by raising interest rates has had a significant effect thus far. Retail Sales Increase 3.0% in January, Reversing the Previous Two Months' Declines The growth was spread across multiple Core control group sales increased by more than the anticipated 1.7%. The Empire manufacturing survey showed an increase from -32.9 to -5.8, indicating that the sector may have brighter prospects ahead.
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1. “Are we heading toward a recession? Here's why economists are divided” Aspen Public Radio, 18 Feb. 2023, https://www.aspenpublicradio.org/2023-02-18/are-we-heading-toward-a-recession-heres-why-economists-are-divided
2. “Higher Core Yields Slightly Favoured the Dollar” Action Forex, 16 Feb. 2023, https://www.actionforex.com/contributors/fundamental-analysis/486701-higher-core-yields-slightly-favoured-the-dollar/
3. “Economists still worry recession could be on the way. But here's how a soft landing may still be possible” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/economists-worry-about-a-recession-but-a-soft-landing-may-be-possible.html
4. “US Economy Keeps Charging Ahead, Adding Pressure on Fed to Hike” Yahoo! Voices, 15 Feb. 2023, https://www.yahoo.com/now/us-economy-keeps-charging-ahead-171126908.html
5. “Charting the global economy: New barriers to trade hamper world economy's recovery” Economic Times, 19 Feb. 2023, https://economictimes.indiatimes.com/small-biz/trade/exports/insights/charting-the-global-economy-new-barriers-to-trade-hamper-world-economys-recovery/articleshow/98057477.cms
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