The jury is still out on whether Missouri and the nation will experience a recession in the coming year, said David Yaskewich, an economist at Southeast Missouri State University.
“Right now, it doesn’t look like we’re going to see a recession, definitely not in the year 2023,” he told “Missouirnet.” “I think the risk of recession in 2024 looks lower than it did at the beginning of this year. But again, there still are these uncertainties. We’re not out of the woods yet, because we have not seen inflation go back to its historical norm, and interest rates do remain high.”
Timing is critical, he said. “The harder it is to bring inflation back to the 2 percent goal that the Federal Reserve has set, the longer that takes, I think, the risk of a recession would increase,” Yaskewich said.
His comments come as the consumer price index shows inflation is about 50% higher than the Federal Reserve’s target.
How does federal spending affect inflation?
“If the United States continues to accumulate more debt, that could be problematic, but it’d be more problematic if the ability to sell treasury bonds would be questioned,” he said. “So if our credit rating were to be tarnished or if foreign investors became less interested in our debt, that would be very problematic for the United States and could have inflationary impacts. Right now, that would have a minimal impact on the inflation we’ve seen in the last year.”
U.S. federal debt currently stands at a historic $33 trillion.
Parts of the economy are fairly strong, particularly the labor market, but Yaskewich is uncertain how long it will last.
“When we were at the worst of the labor shortage, it would have been around April of 2022, and a common number that would be reported that for every unemployed person, there were two job vacancies,” he said. “Today, that number is more like for every one unemployed person, there’s like one-and-a-half job vacancies. It doesn’t sound like a big change when phrased like that, but it actually is a big difference if you look at the actual numbers on an aggregate basis.”
–Alan Goforth | Metro Voice
