Recession Concerns Rising after Second Consecutive Quarter of Shrinking US GDP
- The US GDP shrunk for the second quarter in a row.
- 66% of Americans worry that a significant recession is around the corner.
- 58% of Americans are living paycheck to paycheck.
When the economy is teetering in recession, food prices, gas, and essential goods are rising faster than in 40 years. The US GDP shrank for the second quarter in a row. Jobs are still solid, which is abnormal for a recession.
“We find ourselves in a situation very similar to what we saw in the late 1970s with President Jimmy Carter,” said Tim Snyder. Multiple sources support his sentiment. In a July 28 episode of the BBC World Service News Hour, Kenneth Rogoff said, “A 1970s style situation, where you can have high inflation and low growth at the same time.” In a CNBC report, the St. Louis Federal Reserve President, James Bullard, “Bullard compared the Fed’s current situation to the problems central banks faced in the 1970s and early ’80s. Inflation is now running at the highest points since 1981.”
According to a report in Bloomberg, experts consider many facets to determine the state of a recession. “Technically, the call is made by a panel of experts looking at monthly indicators of employment, consumer spending, personal income, and manufacturing, among others. But with inflation at a four-decade high, many Americans already feel like the country is in a recession.” According to the article, creative trends are tracked to determine the economy’s health. Indicators show that purchases of men’s briefs and champagne are decreasing, while search trends for the word ‘recession’ on Google are rising.
One thing we know for sure is that there is a group of Americans who will be hit hardest by inflation and impending recession. According to CBS Sunday Morning, “The unemployment rate now stands at 3.6%, about where it was before the pandemic and almost a 50-year low. Yet 58% of Americans are believed to be living paycheck to paycheck.” Michelle Singletary, author and personal finance columnist for The Washington Post, urges the portion of Americans who can afford to keep spending to keep spending and going out to eat. Their activity is key to maintaining a healthy economy.
“The classical definition of a recession is two recurring quarters of a negative or retracting GDP,” said Snyder. “Overall, every single metric, save one, on the week, pointed towards a recession.” Americans are worried about a recession. A report from Allianz Life Insurance found that 66% of Americans worry that a significant recession is right around the corner, up from 48% who said the same a year ago.
For more from Tim Snyder, visit MarketScale’s energy industry page.
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