Va. – In an attempt to cool the U.S. economy, the Federal Reserve raised interest rates again this week, with no signs of relief until 2024. On Friday, inflation clocked in at 7.1 percent.
This all comes as fears of a recession loom.
“That’s very tough on people’s pocketbooks when their wages aren’t keeping up with that inflation,” said Dr. Alice Kassens, the John S. Shannon Professor of Economics at Roanoke College. “Yes, we will likely have a recession. How bad it is and how it impacts people depends upon the severity of the recession.”
Most economists agree a recession might hit in the middle of 2023.
“Although no one can know with certainty, of course, because a lot of it is out of anyone’s control,” said Kassens.
In simplest terms, a recession means the economy shrinks for at least six months. There are a lot of pieces to the puzzle, but typically, unemployment rises, less consumer demand, and fewer employees lead to lower production of goods and services.
Dr. David Bieri, an associate professor of public policy at Virginia Tech, said prices on things like groceries, rent, and electricity will likely stay high.
“Household finances will be — for the foreseeable future, by which I mean, certainly for the next 12-18 months — be strained,” said Bieri.
He advised families to watch their spending and debt and make safe investments in things like government securities or treasury notes.
Dr. Dave Brat, the dean of Liberty University’s School of Business, said in order to protect yourself, dust off your resume and consider getting back in the workforce.
“Get in the labor market. Get your kids in the labor market with jobs with benefits,” said Brat. “Lack of healthcare, lack of food, low-income housing, all of those are overcome by having a job with benefits.”
These experts said we won’t know it’s a recession until we’re already in it.