Is the United States Already in a Recession?

Recessions are not always triggered by the collapse of the economy, and they can happen for a variety of reasons, including policy changes and a weakened economy. In fact, the United States has been in recession fourteen percent of the time since World War II. While it’s difficult to measure exactly how far the economy has fallen, the Federal Reserve’s recent interest rate hikes have triggered a pessimistic sentiment among investors. In fact, many investors bet that the Federal Reserve will reverse course and start cutting rates later in 2022. However, most analysts believe the earliest that will happen is in 2023.

As a result, investors have become more nervous about the economy and the financial markets, and they are constantly recalibrating their expectations after every data point. While the data reveals a slowing economy, it’s hard to ignore the fact that home prices are stabilizing. Another source of growth that may be coming up in the next few quarters is a re-stocking of inventories. This is a positive sign for companies because they will have less incentive to trim their inventories. Therefore, they will need to rebuild inventory levels to meet the demand.

The economic situation is weaker than many people realize. While some may be covering their tracks with the weather, the economy is slipping into a slump. Some important economic indicators – including those for manufacturing and services – could fall into negative territory in the coming months. And home prices in some markets are losing momentum. The weakening economy means the future of stocks is uncertain. In the meantime, consumers must continue to be cautious in determining their own investment strategy.

The Fed’s aggressive push to curb inflation has roiled the financial markets and investors fear that tighter monetary policy will tip the economy into recession. While no one actually mentioned the word “recession” in its recent minutes, more than 90 references were made to inflation. Meanwhile, in June, Fed officials raised their benchmark interest rate to their target range of 1.5 percent to 1.75 percent. Powell has also hinted that they may do the same in July.

Is the US in a recession?  At this point it is difficult to say. Often throughout economic history people cannot answer that question until they are deep in one.