The fallout from the next recession will be almost the exact opposite of the 2020 crash
Whether or not the US tumbles into a recession in the next year remains to be seen. That hasn't stopped economists from making their best guesses, and their projections suggest the coming downturn could be the perfect foil to the recession of early 2020.
While rate hikes and weaker demand might slow growth to a halt, it won't power the same kind of nosedive seen just over two years ago. Gross domestic product shrank at an annualized rate of 31.2% in the second quarter of 2020, marking the worst quarter of economic growth since at least 1947 by an incredibly wide margin.
Exactly where growth will slow is also in stark contrast to the economy of 2020. Strict lockdowns immediately slashed spending on services, particularly at in-person businesses like restaurants and bars. Yet spending on goods like furniture, appliances, electronics, and cars boomed as households leveraged their stimulus-boosted finances and bought things that made quarantine a little bit easier.
That shift is key to keeping the economy from suffering a major downturn, Brett Ryan, a senior US economist at Deutsche Bank, told Insider. The bank sees goods producers bearing the brunt of the slowdown while service sectors push toward a full recovery. The downturn will look more like an industry-specific slowdown than"a massive downturn ... across the board," Ryan said.
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