If you’re looking to buy a home or put money down on a significant investment, it’s critical to have an eye on the economy.
There are good and bad times to buy, and many are concerned that we’re heading in the wrong direction.
Americans are starting to get nervous and may wonder, “are we headed for a recession in 2022?” To help you better grasp the picture, here is everything you need to know about the next recession predictions.
What Causes a Recession?
A recession is a period of decline in general economic activity. Usually, this is when the GDP has decreased for two consecutive quarters. However, it also can happen in conjunction with rising unemployment, decreasing retail sales, slowed manufacturing, and falls in individual income.
Recessions are caused by various factors, including economic shocks, loss of consumer confidence, high-interest rates, asset bubbles, and deflation.
The U.S. Job Report
The latest U.S. job reports show that the unemployment rate is 3.8%. There were about 678,000 jobs added to the market in February 2022. The latest reports show that U.S. jobs are recovering well since the pandemic.
One concern related to jobs and unemployment is the vaccine mandates, contributing to job loss in certain cities. If more cities adopt a vaccine mandate, this will likely lead to more job loss and could speed up an incoming recession.
However, officials may relax the mandates as the country continues to go back to normal.
When predicting where the economy is headed in 2022, economists don’t believe a recession is likely in 2022 but instead in 2023. Though increasing gas prices occur before most recessions, several other cushions may keep the economy steady this year.
For example, individual consumers in the U.S. have plenty of money in their pockets due to stimulus checks and other assistance from the pandemic. This means consumers are still likely to purchase goods and services, which will cushion the economy this year.
Increased consumer spending will also help with employment because it reinforces the income gains that allow for expenditures.
However, inflation is very high, and there is a lot of global uncertainty as the war in Ukraine continues. Economists worry that the central bank could be forced to break inflation by the end of 2022, leading to a recession.
When looking at the economic patterns in the U.S, the yield curves show that the U.S. is moving closer and closer to a recession; it’s just not likely this year. You can see more economic predictions for the next recession by looking into the recent work of Suzanne Clark.
Are We Headed for a Recession in 2022? Now You Know
These are all the most important factors to consider for whether a recession in 2022 is likely.
Are we headed for a recession in 2022? It’s possible, but the best predictions show that it’s more plausible in 2023. This means you should be cautious about your investments over the next few years.
This will help cushion you against the harshest effects of a recession.
And if you want more information related to your investment options, be sure to check out the rest of our blog. We have a ton of other great articles that you’re sure to love!
Amanda Byers is a graduate of Columbia, where she played volleyball and annoyed a lot of professors. Now as Zobuz’s entertainment and Lifestyle Editor, she enjoys writing about delicious BBQ, outrageous style trends and all things Buzz worthy.