Are we already in a recession? That’s the question posed by a recent Goldman Sachs investment report, which now forecasts just 0.4% year-over-year growth in Q4 2022. The current economic situation feels unusual. On one hand, consumers seem to be spending and traveling like usual. On the other hand, inflation is making everything more costly, which is certainly causing some economic pain. So which is right? Today, we’ll consider a few factors on both sides of the economic equation:
Economy Is Strong:
- The US just reported 372,000 nonfarm jobs in its June report, beating expectations and showing that labor markets remain strong.
- On the Friday before July 4, the TSA screened nearly 2.5 million people – the highest number since Feb 11, 2020.
- Unemployment remains at 3.6% – among the lowest levels in history.
- China is considering a $220 billion stimulus to bolster economic growth domestically.
Economy is Weak:
- Inflation is causing widespread challenges: Inflation in South Korea is at a 24-year high, Turkey is experiencing 73% inflation, and the UK is at 40-year highs.
- China reported 69 new COVID cases in Shanghai, the highest rate since May. Are more Chinese lockdowns coming?
- The Institute for Supply Management (ISM) index fell to a two-year low of 53% – anything below 50% is considered contractionary.
Hindsight is 20/20, but it’s hard to say for sure whether we’re in a recession for real. There seem to be plenty of bright spots propping up our economy for now; the question is whether the headwinds will slow us to a halt in the near future.