What does a recession look like?
SPRINGFIELD, Mo. (KY3) - Many people view a recession as an abstract concept but it has implications to your everyday life. Understanding what could be coming down the pipeline of our economy will help you to prepare.
In a survey taken by 48 economists, in the National Association for Business Economics, 48% said they expect a recession this year, 25% think it is beginning now, 33% think it will begin between April and June and 20% think it will start between July and September.
Right now, the economy is strong - Inflation is very high; unemployment is very low; retail and restaurant sales jumped 3% in January. Typically it’s determined that the country went into a recession after-the-fact, but here are the signs:
- When the recession hits, we’ll see at least 6 months of a weak economy; the average recession is around 10 months.
- The U.S. Gross Domestic Product will drop – GBP is a way to measure for how many goods and services are produced in the U.S. which can indicate the strength of the economy. In 2022-2023 the GDP has fluctuated up and down.
- The stock markets will decline in a recession, and it will negatively impact investment accounts like a 401k or IRA, but those are long-term investments so don’t panic. The stock market has also fluctuated over the last few months.
- Companies will lay off workers. It has already started in the tech industry but others will be impacted as the economy moves toward a full recession.
- Consumer spending will drop. Less people will be working so they won’t have as much to spend. People who are employed will likely be more conservative in their spending, or prioritize their spending by need instead of want.
The Federal Reserve will continue to raise interest rates to try to cool borrowing and spending. Experts say it’s important to put a focus on your finances during this time.
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