Is A Recession Coming In The U.S.? Here's What Experts Say.

Americans are growing increasingly concerned about the possibility of a recession.

Earlier this month, the Federal Reserve began raising interest rates to slow inflation pressures. During the first quarter of 2022, while consumers and businesses kept spending, U.S. gross domestic product fell by 1.5%, the first drop since the second quarter of 2020, according to The Associated Press.

But that doesnt necessarily mean the U.S. is falling into a recession.

HuffPost spoke to four economics experts about recession fears, the state of the U.S. economy and what we can do to prepare for what lies ahead.

What Is A Recession?

The textbook definition of a recession is a continuous decline in GDP which estimates the value of countrys production of goods and services across two consecutive quarters, according to the International Monetary Fund .

In the U.S., the National Bureau of Economic Research says a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.

Why Is There Anxiety About The State Of The U.S. Economy?

Miesha Williams, the program director for economics at Morehouse College, attributed the economic anxiety to three main factors: rising gas prices due to Russian President Vladimir Putins war in Ukraine, scarce affordable housing and consumer goods, and seemingly increased inflation.

Individuals and households are indifferent between purchasing a meal at home or at a restaurant, since there is no cost savings between the two, Williams said, providing an example of how the anxiety plays out.

To address inflation, the Fed raised interest rates by a half-percentage point earlier this month, the biggest hike in 22 years, according to AP .

The Fed anticipates that ongoing increases in the target rate for the federal
funds rate will be appropriate, Federal Reserve Chair Jerome Powell said after the announcement.

The Feds goals, Powell explained, are keeping the economy close to full employment as well as maintaining price stability.

Inflation remains well above our longer-run goal of 2%, Powell added.

Josh Bivens, the director of research at the Economic Policy Institute, said most of the anxiety is being driven by the relative newness of the inflation weve seen over the past year.

The worry is that to rein it in and return it to more-normal levels might require a lot of policy dexterity, and, if policymakers cant pull this off, this might lead to a recession, Bivens told HuffPost.

Minutes from the Feds Open Market Committee meeting this month, where the 12 members determine monetary policy, including interest rates, show the challenges for the U.S. and other world economies.

Participants observed that developments associated with Russias invasion of Ukraine and the COVID-related lockdowns in China posed heightened risks for both the United States and economies around the world, the minutes said. Several participants commented on the challenges that monetary policy faced in restoring price stability while also maintaining strong labor market conditions.

In light of the high degree of uncertainty surrounding the economic outlook, participants judged that risk-management considerations would be important in deliberations over time regarding the appropriate policy stance.

Any approach the Fed takes will be consequential for the U.S. economy and the possibility of a recession, Bivens explained.

Put simply, if we have a recession because the Fed moves too fast and too high on interest rate hikes, that will be a clear mistake, Bivens said.

Christelle Khalaf, associate director of the Center for Business and Economic Analysis at the University of Wyoming, said it was worth considering that policies implemented during the pandemic to support families may not have been anticipated to cause inflation.

While most economists agree that these policies were needed, the exact size of the needed intervention is a more debated topic, Khalaf said. In 2008, the intervention was not big enough. In 2020, it might have been too big.

So, does the Fed know exactly how to cool off the economy without causing a recession? Maybe. However, this type of uncertainty can make businesses, markets and economists anxious, Khalaf continued.

Dedrick AsanteMuhammad, the chief of membership, policy and equity at the National Community Reinvestment Coalition, said uncertainty is also driven by the continuing pandemic.

How Has The White House Addressed Recession Concerns?

President Joe Biden told reporters on Monday that a recession was not inevitable.

Imagine where wed be with Putins tax and the war in Ukraine had we not made that enormous progress, Biden said. Our GDP is going to grow faster than Chinas for the first time in 40 years.

But Biden recognized the U.S., like other countries, is also dealing with major pressures.

We have problems that the rest of the world has, but less consequential than the rest of the world has because of our internal growth and strength, Biden added.

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