Economists say a recession is looming
(WFSB) – Experts warn we now face a three-headed financial monster that threatens to wreak havoc on the economy.
Eyewitness News spoke with a local professor about the scope of the problems and what we can do now to keep our heads above water.
It’s not difficult to find the impact this lousy economy has on all of us. Just swing by a grocery store.
“The price of your perishable items have gone up big, toilet paper, towels, bleach,” said Madelyn Roberts of New Britain.
Or talk to someone who just filled up their tank.
“The price of gas obviously affects us probably about double what we were this time last year on gas,” said Kevin Anderson of Middletown.
Experts say we are facing an economic triple whammy.
Inflation is rising, stocks are falling, and a full-blown recession is looming.
Experts say we better buckle up, because this bumpy ride will last for a while.
“It’s going to be a couple years before we get inflation under control,” said Professor John Rosen, Economist at the University of New Haven.
Rosen encourages everyone to sit down with a financial advisor, but in general if you are in your 30s or 40s and have a good job, try to exercise patience.
“By all means you should be money away and an awful lot of it should be on stocks,” Rosen said.
If you’re closer to retirement, exercise caution.
“It’s probably best to shift some out of entirely equity portfolio into government bonds or things like that that are a little safer,” said Rosen.
Keep in mind most Americans aren’t invested in the stock market and only have a small amount or 0 savings.
Rosen advises those folks to cut down their debt if possible and search for bargains on essentials.
“Buy a lot of it stock on it when you see a hot price because it’ll be higher 3 months from now,” Rosen said. “When you are out of it.”
People Eyewitness News spoke with have different views on the future.
Some remain calm.
“If you’re willing to be patient and let everything play out you should be all right,” said Kevin.
But others say as stocks fall and inflation rises, their concerns grow.
“Worries about my future the future of my son you know it’s hard,” said Madelyn.
U.S. stocks crashed into a bear market and more challenging days could be ahead.
The Federal Reserve is expected to increase interest rates on Wednesday.
Economists warned that the country should brace for a recession.
They said Americans faced a triple threat to their finances, which has made it difficult for many of them just to get by.
Americans weren’t smiling following Monday’s closing bell at the New York Stock Exchange.
Numbers for the S&P 500 signaled a bear market.
That meant the index dipped at least 20 percent below its most recent high.
“I think there was this fear that in fact higher prices and rising interest rates are going to keep eating into corporate profits and that consumers are not going to be able to maintain their current level of spending,” said Jill Schlesinger, CBS News business analyst.
Investors said they were worried about the Federal Reserve meeting on Wednesday.
“My sense is they’ll raise rates half a percent,” said Mark Zandi, chief economist, Moody Analytics. “That’s what they’ve been signaling for quite some time.”
Some economists speculated that the fed may raise rates by three quarters of a percent, which hasn’t happened in nearly 30 years.
The reason is inflation.
It’s hurting more than just the markets.
“We are seeing a lot of families come back to the pantry that may have not been using the pantry recently,” said Patty Sneddon-Kisting, Urbandale Food Pantry.
“We decided not to make any money from gas, so it’s going to be a little easier for them,” said Ramandeep Kaur, C K Food Mart owner who was selling underpriced gas. “They can save some money.”
The White House said it has been closely watching the situation.
“The way that we see this is that the American people are well-positioned to face these challenges because of the economic, historic gains that we have made under this president,” said Karine Jean-Pierre, White House press secretary.
Financial advisors reminded investors not to panic.
“If it’s your 401K money, and you don’t need for 10 or more plus years, these are things you want to have happen,” said Doug Flynn, certified financial planner. “You want to have a 20 or 25 or maybe even a 30 percent correction into a recession.”
Other analysts said they were hoping for an economic sweet spot.
“I think the Fed has a reasonable chance, a decent chance, of achieving what Jerome Powell calls a softish landing: Either no recession or a very mild recession to bring inflation down,” said Ben Bernanke, former chair of the Federal Reserve.
The value of cryptocurrencies also plummeted. Billions of dollars were wiped out.
Tech companies like Amazon and Apple pulled the Nasdaq into deeper declines.
“The problem is that the Fed was late with fighting inflation and now they’re kind of scrambling,” said Ed Moya, senior market analyst, OANDA.
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