The recession warnings began in early 2022, when inflation was surging, the economy was shrinking and consumers were feeling glum.
Sharp economic slowdown triggers new recession fears
Here are four reasons it has been so difficult for economists to get a handle on what’s happening
Could this be the beginning of that slump economists have been talking about for so long?
Experts are divided on whether the country is in for a recession — likely a mild one — or whether it may be able to avoid one altogether in the coming months. Many say we’re at a pivotal moment, as we wait to see just how dramatically the Federal Reserve’s interest rate increases will ripple through the economy.
“We’ve been hearing ‘A recession is coming, a recession is coming’ for so long, but we’re finally getting to the moment of truth,” said Claudia Sahm, an economist who worked at the Federal Reserve Board for 12 years. “It’s clear things are slowing. The Fed has done a lot, government stimulus is over, basically all pandemic relief programs are done. Are we going to pull this off? Or is the slowdown going to turn into something worse?”
“If we do go into recession,” she added, “it would be the most forecasted recession, ever.”
Why has it been so difficult for economists to get a handle on what’s happening? Here are four factors muddling the outlook.