From a mild recession to a so-called hard landing, NPR sifts through the wild array of recession predictions.
Inflation is now easing but the wage gains remain. That factor should help lift the overall net worth of lower income workers as they face a potential recession. And the most recent labor data shows sectors that typically hire lower-income workers such as leisure and hospitality continued to hire strongly as Americans continued to dine out and take vacations.
In fact, retail businesses, still remembering the nightmare of recruiting workers during the pandemic, are more keen to hold onto staff. That’s also raising hope that those with lesser means could be spared some of the impact of an economic downturn.The Fed has continued to argue it has a path to raise rates without sparking a recession, instead steering the U.S. into what’s called “” – a scenario in which the economy slows but doesn’t contract, and unemployment doesn’t spike significantly. WASHINGTON, DC – DECEMBER 14: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on December 14, 2022 in Washington, DC. The Federal Reserve announced that it will raise interest rates by a 0.5 percentage point to 4.5. Inflation continues to moderate, with theSome of the factors that especially worried the Fed are also trending in the right direction, including, most prominently, cooling wage and price increases.the central bank will raise rates by only a quarter percentage point at its meeting next week.for a stronger global economy, which can have a positive impact in the U.S. as well. This cuts both ways, though, as increased demand for energy to power China’s economy could result in higher oil and gas prices.In an unpredictable world, no scenario can be ruled out – and neither can the prospect that the Fed’s rate hikes will help spark a tough recession, or a hard landing in economic lingo. For one, the Fed could overdo the rate hikes, raising them more than necessary. Managing interest rates is an inexact science and mistakes can be dire. The Fed was widely blamed for keeping rates too low in the lead-up to the 2008 Global Financial Crisis, for example. Meanwhile, Russia’s invasion of Ukraine continues to weigh on the global economy. Nobody can predict how the war there will ultimately end.Failure to raise the ceiling would leave the federal government unable to pay all of its bills, triggering a default. That would rattle financial markets around the world. Even if the government manages to avoid an actual default, simply coming close couldIn an interview with CNN, Treasury Secretary Janet Yellen warned not raising the country’s debt limit has the potential to spark another “global financial crisis.” A worst case scenario, for sure, and one that would likely end up sparking a recession — with a capital R.
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