How Will We Know If The US Economy Is In A Recession?

Inflation, which is still close to its highest level in four decades, continues to pose the most prominent economic threat. Even for employees who earned significant raises, compensation has decreased once inflation has been considered.

According to government data released on Thursday, the U.S. economy expanded more quickly than anticipated in the July-September quarter, demonstrating that despite alarmingly high inflation and Federal Reserve interest rate increases, the country is not in a recession.

However, the economy is far from stable, and the third quarter’s strong growth did little to change economists’ growing opinion that a recession will likely occur next year.

Consumer and company expenditures will continue to decline due to higher borrowing rates and ongoing inflation.

How Will We Know If The US Economy Is In A Recession?
How Will We Know If The U.S. Economy Is In A Recession?

Additionally, the sales and earnings of American firms will decrease due to probable recessions in the United Kingdom and Europe, as well as slower growth in China. A U.S. recession is anticipated to start in 2023 due to these tendencies.

However, there are reasons to believe that a recession, if it occurs, will be only light. Many firms may prefer to keep most of their current workforces even in a weakening economy since they find it hard to locate personnel to hire after significant layoffs during the pandemic.

As per the sources, After two-quarters of the recession, the economy surged to a 2.6% annual pace in the July-September quarter. A significant home sales and construction decline were partially offset by increased consumer spending and exports.

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A recession is often defined as six months of economic deterioration. But nothing is straightforward in a post-pandemic economy where GDP was negative in the year’s first half. Still, the labor market remained strong, with deficient unemployment and excellent hiring rates.

Since growth abruptly ended in March 2020 when COVID-19 struck and 22 million Americans were suddenly out of work, the economy’s trajectory has baffled policymakers at the Fed and many private analysts.

Have a look at How a Little-Known Committee Determines When a Recession Begins:

Inflation, which is still close to its highest level in four decades, continues to pose the most significant economic threat.

Even for employees who received significant raises, after accounting for inflation, their salary has decreased. Lower-income, Black and Hispanic households feel the pinch the most; many families have difficulty paying for necessities like food, clothing, and rent.

As Democrats fight to keep control of Congress in the midterm elections, Republican assaults on President Joe Biden and his fellow Democrats have made high inflation a prominent theme.

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