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The Fed has been trying to slow the U.S. economy without causing a recession, but it may not be possible. Stephanie Roth, J.P. Morgan Private Bank Senior Markets Economist spoke with Yahoo Finance anchors Brad Smith and Julie Hyman about why the U.S. could still see a “run-of-the-mill” recession this year.
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The Covid-19 pandemic has caused an economic downturn that has forced millions of Americans into unemployment. As the U.S. government works to provide relief to those affected, economists are keeping a close eye on the economy to see how it will fare in the coming months. While some predict a quick recovery, others warn that there could still be a recession on the horizon.
A “run-of-the-mill” recession refers to a typical downturn in the economy that is not caused by unique circumstances. These recessions happen when the economy enters a phase of slow growth, usually due to a combination of factors such as high interest rates, low investment and excessive inflation. While the current economic conditions are undoubtedly unique due to the pandemic, some economists believe that the U.S. could still see a recession that is not caused by the pandemic.
One of the reasons for this is that the pandemic has not only affected the U.S. but also countries across the world. This has led to a decrease in global trade and a slowdown in the global economy. As the U.S. is heavily reliant on imports and exports, it is not immune to the effects of the global economic slowdown.
Another factor that could contribute to a recession is the increase in household debt. The pandemic has caused millions of Americans to lose jobs, leading to a decrease in income and an increase in debt. This has the potential to lead to a decrease in consumer spending, which would have a significant impact on the economy.
In addition to this, the current economic policies of the government may not prove to be effective in the long run. While the government has injected trillions of dollars into the economy through various relief measures, there are concerns that a lack of accountability and oversight could lead to misuse of these funds. Furthermore, the government may not be able to sustain such high levels of spending in the long run.
While some are optimistic about the future of the economy, it is important to remember that economic recoveries are not always linear. However, if certain measures are taken such as reforming economic policies and increasing accountability for relief measures, the U.S. could potentially avoid a “run-of-the-mill” recession. Ultimately, only time will tell what the future holds for the U.S. economy.
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