Is the US Economy Headed for a Recession?
Is the Economy in a Recession Now?
As we enter the second quarter of 2023, the question on everyone’s mind is whether or not the US economy is officially in a recession.[0] The textbook definition of a recession is a significant decline in economic activity that lasts for a prolonged period, usually characterized by two consecutive quarters or more of a decline in gross domestic product (GDP).[1]
Economists have been predicting a recession to hit the US economy by mid-2023, and while there have been scattered signs of hope, it is still too early to tell if the US is currently in a recession. According to Larry Summers, a former US Treasury Secretary and Harvard University professor, a recession is inevitable and will likely hit the US soon. He refers to it as a “Wile E. Coyote moment”, where the US will eventually fall off the cliff and gravity will take over.[2]
The best thing to do in times of economic uncertainty is to prepare for the worst and hope for the best. It is important to build up emergency savings accounts, pay down debt and stay the course.[3] It is also important to know which investments tend to do well in a recession, such as real estate and certain sectors of stocks.[1]
It is also important to remember that no one knows exactly what is going on in this economy.[2] The Federal Reserve is continuing to raise rates to combat inflation, but there is a risk of taking too much medicine and getting too stoned. Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, has compared the US economy to a bendable piece of plastic – resilient and able to adapt to changing conditions.[2]
The US economy is currently in a state of limbo, where the storm is still gathering on the horizon. It is important to keep in mind that no one can predict the future and it is best to manage expectations and wait for the storm to pass.
0. “Are we in a recession? Will there be a downturn in 2023? Economists weigh in” msnNOW, 12 Mar. 2023, https://www.msn.com/en-us/money/markets/are-we-in-a-recession-will-there-be-a-downturn-in-2023-economists-weigh-in/ar-AA18xdJS
1. “Investing In A Recession? Keep These 6 Factors In Mind” ValueWalk, 13 Mar. 2023, https://www.valuewalk.com/investing-in-a-recession-keep-these-6-factors-in-mind/
2. “From Wile E. Coyote to edibles: Recession forecasts are getting weird” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/investing/premarket-stocks-trading/index.html
3. “Opinion: Prepare now for coming recession” CTPost, 13 Mar. 2023, https://www.ctpost.com/opinion/article/opinion-prepare-now-for-coming-recession-17829615.php
