What economists are asserting in regards to the potentialities of a recession

all right so despite signs that the inflation rate may be easing forecasters are still expecting High interest rates to push U.S economy into a recession this year yeah and a poll for the Wall Street Journal Economist but the probability of a recession in the next 12 months at 61 percent uh that was a.

Little bit higher just a little bit ago in October it was 63 they still think it's very likely to happen the question is how rough it's really going yeah and the stock market's already been in for a rough ride full performance over the past year that's added fuel to the talk of recession and if a recession does come it could end up being called a.

So-called Rich session a recession that impacts America's wealthiest the most oh I have not heard Rich session before pushing that term apparently is that an economic term I guess so not really new economics we're going to talk to Harriet Tori she's an economics reporter for the Wall Street Journal one of the authors of an.

Article about the economic outlook for a recession thanks for joining us obviously inflation has been easing there's a lot of economic indicators that look positive over the last several months the FED is hoping for a soft Landing in terms of a recession how are economists feeling about that and what's really going on in terms of the labor.

Market inflation and the fed's rising interest rates well from what we can tell from the survey economists are a hard pass on a soft Landing they really don't see this as particularly likely we had three-quarters of economists in the survey answering no to the question will the FED achieve a soft landing and I.

Think what's going on here is that economists feel that the FED is just still really behind the curve they would they were too slow to react to inflation when it started to rise in 2021 that made them you know prompted them to raise rates really aggressively in 2022 and they still have work to do you know economists welcome the fact that we are.

Seeing some inflation some you know some inflation easing in the headline rate you know in in December inflation was six and a half percent that was a lot lower than the 9.1 percent that we saw back in June but it's still very very high especially given the fact that the fed's target is two percent year-over-year inflation and they think.

That what is causing this is the very strong labor market and the labor market remains very strong we saw in December that the unemployment rate was three and a half percent that's you know close to a that's a 50-year low right um so it's really seems to be just you know they're worried that the FED has a lot more catching up to do and that.

They're they're gonna have to keep rates High higher for longer and that eventually this is gonna um cool demand and prompt employers to start cutting jobs and cause a recession unfortunately uh Harriet one of the more strained news phrases I've heard in recent years is this one rich session recession Rich.

Session I got all kinds of issues with it what is it I mean that is not a phrase that I'm familiar with either but I think one thing that um speaks in favor of a shallow and Mild recession this time around is that labor is extremely hard to come by still you know we've seen this very sharp increase in in interest.

Rates over the past year but the labor market remains strong companies still need workers you know you still see hiring signs everywhere um so I think the the expectation is that if a recession does come workers and businesses will do all they can to hold on to workers because workers are just in extremely short supply and the.

Fact is that they're keeping a lot of people out of the labor force you know like early retirements um less immigration due to covert and for other reasons they don't show signs of you know switching anytime soon or changing anytime soon so business is a cognizant of that and so that some economists say that if a recession comes.

You know businesses will try hard to hold on to workers and that potentially means you know obviously there will be job losses in a recession but perhaps not as extreme and egregious as we saw in the last two recessions that we had you know one in 2020 and of course the financial crisis in 2007. right that balancing that strong uh labor market is.

Certainly something that the fed's looking to and and potentially could lead to that soft Landing um I'm seeing here that in your Wall Street Journal survey um your accomplishments are predicting that employers will start cutting jobs in the second quarter tell us what industries are expected to be impacted.

More um and uh and and are these expected to be more of the middle income high-paying jobs minimum wage well these are those are not questions that we really go into in the survey you know we just ask for payrolls generally across the board I mean when we see recessions the the businesses that we we.

Tend to see hit a you know cyclical ones discretionary spending there's often very large drops in jobs you know for instance in the services sector you know restaurant workers people have less money or they feel like the you know that they feel nervous about a recession so they stop traveling they stop going out to eat things like that maybe they.

You know cut back on on things like services like haircuts um so those Industries can often be hit pretty hard in a recession um but yeah it's definitely the case that our survey did expect businesses to start cutting jobs in the second quarter and that's also when they expect you know growth to turn negative and I think.

Um what economists are saying is this this all relates to Fed interest rate Rises you know they they expect that demand is going to start to to call people of one one thing that's been very strong over the past year is consumer spending you know I think we're stronger than expected people had a big buffer from from stimulus checks obviously the.

Labor market has been very strong and once the economy reopened after covid people really did want to go out and spend they wanted to take those vacations have those restaurant meals that they couldn't do during covid um but that you know we've definitely seen that these stimulus funds have and these savings have started to run down.

And so there is an expectation that consumers will pull back and that that will of course have an impact on growth yeah well they have been making that prediction though for a while and uh and still it seems like people are continuing even to go into debt in order to continue some of that more discretionary funding all right that is.

Very true yeah yeah all right harrietori appreciate it thanks thank you thank

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