The U.S. economy has been strong so far in 2023, with jobs growth continuing, GDP rising and inflation slowing. But several cracks in the economic armor have started to appear. Top economists and money managers are starting to worry that the recession that was predicted for 2023 could just be arriving a little later than expected.
0:00 Potential recession
0:40 Government stimulus programs
1:52 Lower-income household savings
2:58 Fed interest rates
I’m Dion Rabouin, a WSJ reporter covering markets and the economy. I’ll be diving into all things finance, from the popular and well-known — like crypto and stocks — to the complex and intricate — like leveraged loans, derivatives and private equity. Subscribe to join me as I take a deep dive into what’s making money move and why it matters.
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Three Reasons a U.S. Recession May Be Delayed, Not Averted
The outbreak of the COVID-19 pandemic sent shockwaves across the global economy, and the United States was no exception. With businesses forced to shut down, record unemployment rates, and a stock market plunge, fears of an impending recession loomed large. However, while some experts believe that the worst is over and a recession has been averted, others caution that it may only be delayed. Here are three reasons why a U.S. recession may be delayed, rather than completely avoided:
1. Unemployment and job insecurity: Even as the economy starts to slowly reopen, the rampant unemployment caused by the pandemic is unlikely to disappear overnight. Millions of individuals have lost their jobs and it will take time for those positions to be restored. Moreover, those who have managed to retain their jobs may face reduced working hours or lower wages due to the decrease in consumer demand. High levels of unemployment and job insecurity will inevitably impact consumer spending, which is a vital driver of economic growth. As a result, the overall economy may struggle to regain its pre-pandemic stability, making a recession more likely in the near future.
2. Business closures and bankruptcies: The closure of businesses during the pandemic leads to a cascading effect on the economy. Small businesses, in particular, are more vulnerable to closure due to limited access to capital and resources during these uncertain times. Many businesses have already filed for bankruptcy, and more may follow suit as they struggle to recover from the financial losses incurred during the lockdown period. This wave of closures and bankruptcies will have lasting repercussions on the economy, as it not only affects employment but also disrupts entire supply chains. The long-term impact of these closures will likely impede economic recovery and increase the probability of a recession.
3. Global economic slowdown: The pandemic has not only affected the United States but has also had a significant impact on the global economy. Major economies around the world are grappling with the aftermath of the pandemic, experiencing their own economic downturns. This global slowdown may have severe adverse effects on U.S. exports, which will further hamper economic growth. In addition, disruptions to global supply chains and decreased foreign investment will impact multiple sectors of the national economy. This interconnectedness of global markets renders the U.S. susceptible to the repercussions of a worldwide economic downturn, making a delayed recession more likely.
While various fiscal and monetary policies have been implemented by the government to mitigate the effects of the pandemic, it remains uncertain whether these measures will be enough to prevent a recession altogether. The resilience of the U.S. economy and its ability to weather the storm will depend on various factors, including the duration of the pandemic, consumer confidence, and the effectiveness of government interventions.
In conclusion, while the early signs of economic recovery may offer a glimmer of hope, it is important to recognize that a U.S. recession may be delayed, rather than completely averted. The challenges posed by high unemployment rates, business closures, and the global economic slowdown cannot be disregarded. As the nation rebuilds its economy, it will be crucial to monitor these factors closely to assess the potential trajectory of a recession and implement appropriate policies to mitigate its impact.
Do you think a recession is still on the horizon?
With inflation running at a four-decade high, the Recession is now the ‘most likely outcome for the economy and I cannot imagine being a victim of circumstances. My portfolio suffered a big hit, holding it further won’t be any good. I've heard of people netting hundreds of thousands this red season. How can I ensure this?
I was an unexperienced trader and i lost over $30K when the recession. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I find one source to recover my money, at least $5k profits weekly. Thanks so much Mrs Desiree Madison
My savings is minus ➖️$78.600 . U.S not doing well that is true. People don't have real money
Hail Mary
Well, I am not spending anymore on things.
Look at energy costs to households. It’s eating up assets.
Forget the prince william
I believe the key is productivity gains. It likely has more room to go up causing further slowdown of inflation and resulting in wage increases to catch up with inflation. If these play out, a bad recession can be skirted. Of course it is anybody's guess but a recession is not written in stone. I would not believe these so called experts anyway (they have been proven wrong time and time again) and it pays to be optimistic over time.
FED should leave interest rate alone. Let market to adjust market by supply and demand.
Most of the working class have felt like it's been a recession for years. Let's stop acting like the rich's definition of hard times is what matters
whats a government shutdown gonna do?
Student loan payments are coming back. Some people's budgets are gonna get messed up.
Taking early notes from Warren as to the importance of sound asset diversification and risk management It can’t be overstated. I’ve been trying to grow my portfolio of $300K for sometime now, I would greatly appreciate any other suggestions.
it's funny how the fed and the Government target people's saving and not the supply issues and corporates greed.
There is huge housing supply issues and that's because of monopoly.
there is as well issue with corporate greed. The Gov can put a temporarily price controls on certain things such as rent, food, fuels
Bu this Admin works for the corporate and the donors as well as the Fed
Real Estate is absolutely overbought. The institutions bought up a lot of real estate and continue to do so in hopes that fed will eventually lower rates and people who are currently renting would start buying homes which would drive the prices further up. Fed on the other hand is targeting real estate and keeping the interest rates high so real estate market would crash. Add to that affordability has never been so low in decades. This is a ticking time bomb and the elephant in the room that no one wants to address
To me you just have to walk around to see how things are going. Restaurants that were really busy during the earlier part of the summer are now dead. Malls and other stores are empty. Movies are empty. Usually you see it on the street before the economists and markets move. Markets, before economy, but the eyeball test has never let me down before.
Is WSJ here actually Wall Street Journal, or something else?
Savings rate lower because people have to spend more on inflation!
Save some money folks, no one knows when it will happen, bit when it does you will be much happier to have that savongs to buy investments on sale
Love it
keep it up. good job sir
jb good job
I think it's laughable that the analysts think that low-income people still have any "savings" from the government stimulus. For most low-income people those savings would have been gone within the first couple of months of receiving them
This is time is different
The US economy is big enough for people to believe all the geopolitical tensions driving down growth almost everywhere wouldn’t mean much considering the recent stimulus. The problem is its long term structural effects versus short term monetary effects. There’s a lof of guessing going on for too long due to the absence of historical precedents, particularly in the labour market variables. In any case, the only certainty is Elizabeth Warren will somehow be complaining about the FED…
I'd say go for a 25pb raise on Nov 01st then hold in both next week and Dec 13th. Who know for January 2024 at this point though next week is a SEP time so there will be some insights then and on the release of minutes.
Savings depelting
credit card delinquacies raising
Bank rejection rates across various loans raising
Labour Markets are softening ( unemployment up to 3.8%)
a combination of these things is a serious sign towards conusumer spending.
and stil Inflation is way above 2% target despite Interest rates are at 22 year high….
unless Government and the Federal Reserve does something about this ,Recession seems highly likely atleast in 2024
Wtf one of these “recession prediction timeframe” videos will be right at some point. In early 2022 it was supposed to happen in mid 2022. Then that turned into early 2023. That turned into mid 2023. Now it’s early 2024. It’ll be right one of these times. In the meantime, I’ll just keep investing thanks.
Love this format! I am 100% sure that the recession is coming latest by 2024…
"may be"
yea thanks, but no thanks.
A recession and 4.5% unemployment is what the FED needs to get to the 2% inflation target. It'll be tough in the short term, but better to rip off that bandage. Also, hopefully a recession will put an end to all the speculation in the stock and real estate markets.
Soft Landing Summer™️
Listen to me. Zero way in hell 2024 recession. It's an election year.
Soft landing summer into a hard fall and winter lol
If we really had as much inflation as we've been told, why are stocks down?
Stocks are a hedge against inflation.
What if the issue is " things really suck for the majority," and the Fed interprets that as inflation?
It just seems like we are in a pump and dump market since 0DTE options started trading. If someone told me that when I was buying shares of a company, all I was really doing was holding inventory for a wild casino. I would have never put 1 cent in the market.
Like most people, I was forced into funding this casino through my 401k.
Why not be honest and just add a corporate tax to the other taxes on our paychecks?
Solid and very informative video, Thx Dion!