RALEIGH, N.C. (WNCN) — Are we headed for a recession?
One economist from North Carolina State University says it’s not a certainty that that’s where we’re headed.
“I think the takeaway is that the future path of the economy is very difficult to forecast, even for economists,” said Ayse Dur, an assistant professor of economics at N.C. State’s Poole College of Management.
“I can say that by looking at that data, the U.S. economy is still very strong, but we have to be cautious and prepared for what might come in the near future by looking at the Federal Reserve’s monetary policy, which will surely be restrictive,” she added.
The National Bureau of Economic Research has not declared a recession. While inflation is high, unemployment is down — with roughly two open positions for every unemployed worker, figures show — and Dur says the economy is “actually quite robust” despite “some slowdown” in terms of the Gross Domestic Product. A common definition of a recession is consecutive quarters of declining GDP.
“A lot of Americans started asking whether the U.S. economy is in a recession,” Dur said. “I like to start by saying … we are not in a recession.”
The question is whether the Fed’s goal of bringing inflation down to 2 percent — which will involve raising interest rates, making it costlier to borrow money — will eventually trigger one.
Dur says that “is very difficult to answer.
“Nobody probably knows what will happen,” she said. “But in the best-case scenario, we can say there can be some soft landing because the labor market is really strong, and the US economy is very resilient,” Dur said. “We can, perhaps, see some slowdown in the economy but may not go into a recession.
“In the worst-case scenario, bringing down inflation might take longer than expected, which might require more interest rate hikes and a more painful path for the economy,” she added. “But hopefully, that will not happen.”
That raises another question: How will we know if we are, in fact, in the middle of a recession?
Dur says there’s “no single macroeconomic variable that tells us whether we’re in a recession or not.”
Instead, it’s something that “is usually done in retrospect, when we have sufficient data after every session else.”