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Experts believe that the US is going to enter a “rolling recession”, which means that individual sectors will decline in turns rather than all at once.
Even though US unemployment is at its lowest point since 1969 and GDP rose 2.1 percent in 2022, inflation remains relatively high at 6.5 percent, tech companies continue to laying off thousands of people and manufacturing is in recession.
On top of that, the housing market is experiencing its worst sales slump since the Great Recession, while 69 percent of reporting companies missed analyst expectations for the latest quarter, reports CNN.
At least one expert, Liz Ann Sonders, chief investment strategist at Charles Schwab, publicly stated that “the economy will suffer continual recessions” during an appearance at a National Retail Federation event in January.
Despite clear signs of a weak carryover to 2023, some economists are cautiously optimistic that the economy will avoid a full-blown recession.
Liz Ann Sonders, a senior vice president at Charles Schwab, said last month that the United States will experience ongoing recessions that will hit some sectors, but not all.
The housing market is experiencing its worst sales slump since the Great Recession
Federal Reserve Chairman Jerome Powell did little to calm investors last Tuesday, saying: ‘This cycle is different from other cycles. It has simply confounded all sorts of prediction attempts.
According to CNN, some economists believe that this disconcerting economy points to signs of a creeping recession.
Sonders said in January that during the covid-19 pandemic “pockets of weakness” were created in the economy in sectors such as housing and services, as everyone was locked up at home.
Although this was offset by excessive reliance on other aspects, such as retail.
With residential investment posting its seventh straight quarterly decline, the longest streak since the collapse of the housing bubble triggered the Great Recession of 2007-2009, there are signs the housing market may be stabilizing.
Mortgage rates have been on a downward trend as the Federal Reserve slows the pace of its rate hikes.
“A large part of the reaction to higher interest rates is already in the economy and financial markets,” Sung Won Sohn, a professor of finance and economics at Loyola Marymount University in Los Angeles, told Reuters.
He added: “Given that the Fed has managed to precipitate an ongoing recession, it’s time to think about an exit strategy.”
Economists warn that the US is on a similar trajectory to 2008, the start of the Great Recession. Stock traders are seen here stressed by the economic downturn in October 2008
Inflation also eased in the fourth quarter. A measure of inflation in the economy rose at a rate of 3.2 percent, pulling back from the 4.8 percent pace of increase in the third quarter.
While many parts of the economy have shifted to a lower gear, the job market shows no signs of a substantial cooling.
Companies outside the technology industry, as well as interest rate-sensitive sectors like housing and finance, are hoarding workers after struggling to find work during the pandemic.
Yahoo said Thursday that it plans to lay off more than 20 percent of its total workforce as part of a major restructuring of its ad technology division.
The cuts will affect nearly 50 percent of Yahoo’s ad-tech employees by the end of this year, including nearly 1,000 employees this week, the company said.
Yahoo, which has been owned by private equity firm Apollo Global Management since a $5 billion buyout in 2021, added that the move would allow the company to reduce its focus and investment in its flagship ad business called DSP, or platform-side. Of demand.
JPMorgan Chase’s annual Business Leaders Outlook found that most bosses expected a recession next year, but often felt they could still increase their sales and perhaps even their profits.
This comes as many advertisers have cut their marketing budgets in response to record inflation rates and continued uncertainty about a recession.
“There are no signs in the latest jobless claims data that the job market is cracking at the start of the new year,” said Conrad DeQuadros, senior economic adviser at Brean Capital in New York.
Last week, President Joe Biden said that the proof that his economic policies were working was in the January jobs report. He showed that 517,000 jobs were added as the unemployment rate fell to 3.4 percent, making it “very clear” that his “chorus of critics” was wrong.
“This is where we are: the strongest job growth in history,” Biden said. “Simply put, I would say that Biden’s economic plan is working.”
During his State of the Union address Tuesday night, Biden said, “You wonder if there’s still a way for your kids to get by without having to move.”
The president continued: ‘I understand. That’s why we’re building an economy where no one is left behind. Jobs are coming back, pride is coming back because of the decisions we’ve made in the last few years.’
In the official Republican response, Arkansas Gov. Sarah Huckabee Sanders, who gained a national profile as former President Donald Trump’s press secretary, focused more on the culture war.
She said in part: “Most Americans simply want to live their lives in freedom and peace, but we’re under attack in a left-wing culture war that we didn’t start and never wanted to fight.”