What economists think you should know about inflation, jobs and recessionary fears.
Shoppers at Cook Brothers, 1740 N. Kostner Ave. in the Hermosa neighborhood, August 4, 2022.Chicagoans continue to grapple with the highest inflation seen since the early 1980s, a shrinking economy is raising fears that a recession is right around the corner.In June, the Consumer Price Index hit 9.4% in the Chicago area. Food prices were up more than 11% and housing costs were up 8.
“I think we’re quickly going into [a recession], but we’re not there yet,” said Phillip Braun, a clinical professor of finance at Northwestern’s Kellogg School of Management. “If you look since World War II, there have been 14 recessions,” Goolsbee said. “And by far the most common cause of recessions is the Fed raising the interest rate faster than the economy can handle.”On a Thursday earnings call, commercial real estate giant CBRE predicted a fourth quarter recession preceded by a third quarter economic slowdown.
The danger, economists say, is that raising interest rates too aggressively and diminishing access to credit could tip the U.S. into a recession that would bring layoffs and rising unemployment. U.S. wheat prices are still high, though the global price of wheat has gone down, Braun said. The rise in U.S. prices could be partially explained by the war in Ukraine causing increased demand for U.S. wheat globally, though other factors are likely involved as well, he said.
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