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Signs of recession?

Wall Street Journal article reports that 2/3’s of top economists at the United States' largest financial institutions are predicting a recession in 2023

  • Top concerns cited in the survey
    • dwindling of pandemic savings
    • decline in the housing market
    • tightening of lending rules
    • unemployment rates above 5%
  • resulting in millions of Americans losing their jobs.
    • Inflation began to increase at the beginning of 2022, rising at its fastest pace in 40 years
      • currently sits at three times the government's preferred rate of two percent.
  • Households have also increasingly had to take out lines of credit to afford their lives, as total household borrowing increased by $351 billion between the second and third quarter
    • total of $16.51 trillion, the fastest increase in 14 years.

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  • CNN reported that former Federal Reserve Chairman Alan Greenspan believes a US recession is the “most likely outcome” of the Fed’s aggressive rate hike regime meant to curb inflation
    • doubts this current bout of hikes will result in a repeat performance
    • The last two months of data showed that prices are beginning to decelerate – good news but not good enough, he said. “I don’t think it will warrant a Fed reversal that is substantial enough to avoid at least a mild recession”
    • Wage increases and, by extension, employment, “still need to soften further for a pullback in inflation to be anything more than transitory”
    • “So we may have a brief period of calm on the inflation front, but I think it will be too little too late”
    • “inflation could flare up again and we would be back at square one”

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