High inflation and rising interest rates are slamming the brakes on U.S. growth, economists say, but there’s still a narrow chance to avoid a second recession in three years. The outlook is not looking good, to be sure.
High inflation and rising interest rates are slamming the brakes on U.S. growth, economists say, but there’s still a narrow chance to avoid a second recession in three years.The economy shrank in the first quarter for the first time since the onset of the pandemic. The U.S. is also on track to expand less than 1% in the spring based on the latest Wall Street estimates, putting it dangerously close to recession territory.
That’s not all. Higher rates will make it more expensive to buy a car, rely on credit cards, take out a business loan or sell corporate bonds. — Richard Moody, Regions Financial Healthy vital signs Unlike in the 2007-2009 recession, for example, consumers and businesses have relatively little debt and the U.S. banking system is sound.
Restaurant reservations tracked by OpenTable, for instance, recently hit the highest level on record. Demand for gas entering the summer driving season has surged despite record prices. Hotel bookings have soared. And international travel is approaching pre-pandemic levels. Although a smattering of high-profile companies have recently announced layoffs, job openings have stayed near a record high.
The difficulty in finding and retaining talent, what’s more, might make companies more reluctant to carry out mass layoffs except as a last resort. It would be hard to refill those positions once the economy improved.
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