For now, most economists don't foresee a downturn in the near future.
Stock prices are sinking. The Federal Reserve is making borrowing much costlier. Home sales are down, and mortgage rates are up. And the economy actually shrank in the first three months of this year. Is the United States at risk of enduring another recession, just two years after emerging from the last one? For now, even the more pessimistic economists dont foresee any imminent downturn, at least not before next year. – Stock prices are sinking.
For now, most economists don't foresee a downturn in the near future. Despite the inflation squeeze, consumers — the primary driver of the economy — are still spending at a healthy pace. Businesses are investing in equipment and software, reflecting a positive outlook. And the job market is still booming, with hiring strong, layoffs low and many employers eager for more workers.
Fed Chair Jerome Powell has vowed to do whatever it might take to curb inflation, including raising interest rates so high as to weaken the economy. If that happens,On Wednesday, the Fed is set to raise its benchmark interest rate, which affects many consumer and business loans, by as much as three-quarter of a percentage point.
The nation's unemployment rate is at a near-half-century low of 3.6%, and employers are posting a near record number of open jobs. Yet even an economy with a healthy labor market can eventually suffer a recession if borrowing becomes costlier and consumers and businesses put a brake on spending.Higher loan rates are sure to slow spending in areas that require consumers to borrow, with housing the most visible example.
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