2-Year Recession Threatens US Prosperity

Many economists say the United States faces a recession, due primarily to inflation. However, inflation may last well over a year, and the millions of jobs that are unfilled today could disappear in months, pushing unemployment higher.

While inflation may be the primary catalyst of an economic drop, there are other factors. One, which is partially related, is that the Federal Reserve is unlikely to reverse its course and make money “less expensive.” The federal government will not put together an aid package for individuals and businesses that mirror those it created during the worst of the COVID-19 pandemic. Without the likes of the Paycheck Protection Program, companies that need aid will not have it. And, as usually happens in a tough economy, banks will be less likely to lend money.

While unemployment is only 3.6% nationwide, in several states it is much higher. Rates in Pennsylvania and California are 4.9%. Even in these huge and broad economies, trouble in a few industries and cities can be a substantial problem.

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If inflation does cut back American spending, it will damage the holiday season. Retailers are among the country’s largest employers. In most recent years, retailers have posted results of 5% or more over the previous year. This could easily end.

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Finally, many Americans have become “rich” because of surging home prices. Mortgage rates could top 6% soon, which will cool the market quickly.

A recession is on the horizon, and it could be a long one.

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