In its latest economic update, Credit Union National Association CUNA questioned whether the U.S. is currently in a recession.
In the second quarter of 2022, the gross domestic product GDP fell by 0.9% annually, marking the second consecutive GDP contraction the common definition of a recession. The Bureau of Economic Analysis BEA reported that this is better than its contraction of 1.6% annually in the first quarter.
It is very hard to say that the economy is in a recession when you have a labor market that is strong, CUNA Senior Economist Dawit Kebede said. A strong labor market implies strong consumer demand. According to the latest employment report from the Bureau of Labor Statistics BLS, jobs increased by 528,000 in July. This was more than what was previously forecast and recovered all of the jobs lost during the Pandemic, Kebede previously said.
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Before the latest GDP numbers were released, the White House Council of Economic Advisors said that even if the GDP report is negative, it's unlikely that it will indicate a recession. A recession is usually considered to be after two consecutive quarters of negative GDP growth. The White House said that may not be the case in this instance.
A recession is defined as a decline in economic activity that is spread across the economy and lasts more than a few months, according to the National Bureau of Economic Research. The bureau will wait as long as a year to declare that a recession has begun.
As CUNA economists analyzed the latest jobs report, they have questioned the possibility that the economy is currently in a recession. The group pointed out in its economic update that the rising inflation is primarily due to oil prices.
The June inflation numbers show that prices have increased 9.1% year over year, and the monthly increase was 1.3% from May to June, according to Kebede. He said that was a very big increase. During that time, energy prices have contributed to half of the increase. If that were not the case, inflation would have been half of that. If you are struggling with rising costs, you may consider using a personal loan to pay down debt and save on your monthly payments. You can compare multiple lenders at once and choose the one with the best interest rate for you at Credible.
The Federal Reserve is likely to continue raising interest rates through 2022 and 2023, as it fights to bring inflation back down, despite the recession debate.
The Fed increased interest rates by 75 basis points at its most recent meeting. This year, the central bank has raised rates for the federal funds rate for the fourth time this year, and brought the target range to 2.25% to 2.5%.
The federal funds rate is projected to reach 3.15% by the end of the year and 3.25% by the end of the year. The unemployment rate will be steady at 3.6% this year, before it will go up to 4% in 2023.
Interest rates for auto loans, home loans and credit cards, as well as other loan products, will also go up as the Fed continues to raise rates. If you want to take advantage of interest rates now before they increase, you may consider taking out a personal loan to pay down high-interest debt. To find out if this is the right option for you, you can contact Credible to speak to a loan expert and get all of your questions answered.
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