Fed Predicts Mild Recession

Fed Predicts Mild Recession

(RightWing.org) – Three banks collapsed earlier this year within the space of a week — Silvergate Bank (March 8), Silicon Valley Bank (March 10), and Signature Bank (March 12). Signature’s fall marked the third-largest failure in the nation’s banking history, stranding billions of dollars in depositors’ funds. While the long-term impact of those closures remains to be seen, some experts at the Federal Reserve System (the Fed) recently predicted a mild recession before the end of the year.

On April 12, POLITICO posted a copy of the minutes from the Federal Open Market Committee’s (FOMC) latest meeting, conducted on March 21 and 22. Staff members reminded the Board of Governors that their forecast already included the expectation of “subdued real GDP growth” for 2023 accompanied by “some softening in the labor market.”

However, considering the impact of the recent banking sector collapses, the staffers predicted the country would enter a “mild recession” before the year’s end. The staff members appeared to hedge their bets by underscoring their uncertainty during the meeting. For instance, they noted that if the impact of the recent shifts in the bank sector abated fast enough, “the risks… would tilt to the upside for… economic activity and inflation.”

Inversely, if the situation at financial institutions “deteriorated [faster] than assumed,” the risks would “be skewed” toward recession. The staffers warned that in the past, recessions “related to financial market problems” tended to last longer and hit the economy harder than “average” ones.

The public will face certain conditions should the country enter a recession.

  • Decreased bargaining power for workers, leading to smaller wages and reduced benefits.
  • Increased difficulty getting loans.
  • Potential job losses, depending on the length and severity of the recession.
  • Reduced prospects for new jobs.

Fortunately, Americans aren’t helpless. Instead, they can prepare for a recession by considering the following suggestions.

  • Seek multiple sources of income instead of relying on one means of earning money.
  • Set aside enough money to cover living expenses for at least three months.
  • Start paying off credit card debt and other loans.
  • Look for recession-proof work.
  • Update your resume/CV and contact others in your network about employment opportunities.

The minutes from the Fed’s meeting indicated it would take a couple of years for the economy to level back out again. So, the sooner Americans act to protect their futures, the better.

Copyright 2023, RightWing.org