{"id":449186,"date":"2022-05-19T01:41:42","date_gmt":"2022-05-18T22:41:42","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/americans-are-likely-facing-a-deeper-than-normal-recession\/"},"modified":"2022-05-19T01:41:42","modified_gmt":"2022-05-18T22:41:42","slug":"americans-are-likely-facing-a-deeper-than-normal-recession","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/americans-are-likely-facing-a-deeper-than-normal-recession\/","title":{"rendered":"#Americans are likely facing a deeper-than-normal recession"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a28d0c82681f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a28d0c82681f\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/americans-are-likely-facing-a-deeper-than-normal-recession\/#%E2%80%9CAmericans_are_likely_facing_a_deeper-than-normal_recession%E2%80%9D\" >&#8220;Americans are likely facing a deeper-than-normal recession&#8221;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CAmericans_are_likely_facing_a_deeper-than-normal_recession%E2%80%9D\"><\/span>&#8220;Americans are likely facing a deeper-than-normal recession&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n<aside class=\"single__inline-module alignleft\">\n<\/aside>\n<p>Tolstoy famously wrote that all h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>y families resemble one another, but each unhappy family is unhappy in its own way. He might have said the same about unhappy economies \u2014 and added that there are all too many signs the US recession now in the works will likely be of the particularly unhappier kind.<\/p>\n<p>Among the reasons to fear a deeper-than-normal recession is that monetary-policy tightening is causing the equity and credit market bubbles to burst. Since the start of the year, not only has the Federal Reserve\u2019s abrupt policy shift wiped out almost 20% of the stock market\u2019s value; it has also wiped out nearly 20% in the bond market\u2019s value and close to 50% in the value of exotic markets like bitcoin.<\/p>\n<p>The combined evaporation of some $12 trillion, or 50% of gross domestic product, in household wealth since the start of the year must be expected to cool consumer demand in time. Households will begin to stress about their reduced 401(k)s, which will make them want to rebuild their savings. According to the Federal Reserve, for every sustained $1 loss in household wealth, consumers tend to reduce their spending by 4 cents.<\/p>\n<p>This means that, although consumer spending has held up well to date, because of their financial-market losses consumers might soon be expected to reduce spending by as much as 2% of GDP. This is the last thing we need when consumers are already cutting back because of soaring gasoline and food prices and because their wages are being eroded by high inflation.<\/p>\n<p>Another cause for concern is that the Fed\u2019s tightening has led to an abrupt jump in the 30-year mortgage rate from around 3% at the year\u2019s start to 5.5% at present. This has reduced the affordability of housing by 25%. That in turn is already leading to a marked cooling in housing demand.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Housing.jpg?w=1024\" alt=\"A general view of an under contract sign in front of a house as seen in Hawthorne, NJ on April 21, 2022.\" class=\"wp-image-22323399\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Housing.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Housing.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Housing.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>The Federal Reserve\u2019s uptick on mortgage interest rates could pop the housing bubble.<\/figcaption><figcaption><span class=\"credit\">Christopher Sadowski<\/span><\/figcaption><\/figure>\n<p>It is also not helping matters that the shift to a very much tighter monetary-policy stance is coinciding with the fading of last year\u2019s massive $1.9 trillion American Rescue Plan stimulus. The International Monetary Fund says this will result in an approximate halving in the US government budget deficit from 10% of GDP in 2021 to less than 5% of GDP in 2022. So not only will the economy have to cope with higher interest rates \u2014 it will also have to learn to live with very much less government policy support than it had before.<\/p>\n<p>Further clouding the US economic outlook is the much more difficult external environment for US exporters as a result of a surging dollar and a weakening of the rest of the world economy.<\/p>\n<p>The dollar has risen to a 20-year high as foreigners have been attracted by higher US interest rates and the safety of US Treasury bonds at a time of global financial-market turbulence. At the same time, the world economy is experiencing a synchronized economic slowdown with the simultaneous weakening in the Chinese, European and emerging-market economies. Unlike in 2008 when strong Chinese economic growth supported the world economy, we can\u2019t count on China to be the main engine of growth because of President Xi Jinping\u2019s economically damaging zero-tolerance COVID policy.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Inflation-1.jpg?w=1024\" alt=\"People shop at a grocery store in Monterey Park, California.\" class=\"wp-image-22323400\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Inflation-1.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Inflation-1.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/Inflation-1.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Americans have been spending less lately while inflation continues to eat wallets in grocery stores.<\/figcaption><figcaption><span class=\"credit\">FREDERIC J. BROWN\/AFP via Getty Images<\/span><\/figcaption><\/figure>\n<p>Last year, Fed Chairman Jerome Powell kept assuring us that the rise in inflation was transitory \u2014 only to find that inflation surged to a 40-year high. Today, he is assuring us that he can reduce sky-high inflation by engineering a soft economic landing even though all the clues are pointing in the opposite direction. Let us hope that this time Powell is right to be optimistic and we are spared an unusually hard and unhappy economic landing.<\/p>\n<p><em>Desmond Lachman is a senior fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund\u2019s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.<\/em>\n                        <\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2022\/05\/18\/americans-are-likely-facing-a-deeper-than-normal-recession\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Americans are likely facing a deeper-than-normal recession&#8221; Tolstoy famously wrote that all happy families resemble one another, but each unhappy family is unhappy in its own way. He might have said the same about unhappy economies \u2014 and added that there are all too many signs the US recession now in the works will likely&#8230;<\/p>\n","protected":false},"author":1,"featured_media":449187,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/05\/newspress-collage-22317329-1652910203636.jpg?quality=75&strip=all&1652895917&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[129343,5069,70550,100568,88397,70865,70551,73711,78738,91261,73809],"class_list":["post-449186","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-5-18-22","tag-economy","tag-federal-reserve","tag-gas-prices","tag-global-economy","tag-government-spending","tag-inflation","tag-investments","tag-jerome-powell","tag-recession","tag-treasury-department"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/449186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=449186"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/449186\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/449187"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=449186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=449186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=449186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}