Economic outlook for 2023 ‘looking good’ according to Bradley econ professor
PEORIA (25 News Now) - The past year has been marked by economic turbulence as inflation reached record highs leading to a snowball effect on other parts of the economy.
Two questions face consumers when looking ahead to the economy in 2023: What’s the trend for inflation, and what are the chances of a recession?
Inflation caused prices to rise at historic levels, driving up the costs of everyday goods and services. Despite those costs, consumers kept purchasing, creating a cycle of rising costs that consumers footed the bill for, turning to credit cards more often to cover the rising costs of goods which led to a record increase in credit card debt ahead of the holidays.
That pushed the Federal Reserve to raise interest rates in order to quell the demand driving prices up. So far, the data shows signs that the strategy is working, according to Economics Professor Colin Corbett of Bradley University.
Now, the trick will be bringing those rates back down at the right time and at the right pace to avoid a recession.
“The idea of a soft landing is that we can get inflation under control without triggering a recession,” Corbett said. “That’s pretty difficult... but things are looking good.”
He did warn that inflation relaxing doesn’t mean prices will go down or return to their previous levels. Once prices go up, they tend to stay there according to Corbett. Instead, the Fed is looking to stop the continual increase in costs.
A positive sign for Corbett is the state of the labor market. There are lots of jobs available for workers, and they are able to pick and choose a job that fits their needs for work and compensation. For employers, it’s more of a struggle. There’s plenty of work to go around, but a limited supply of workers is available.
For workers, Corbett said it’s still a good time to find work, or change jobs if that’s something a person is interested in.
A sign of a recession is when typically stable industries, like the automotive or retail sectors of the economy, start laying off large swaths of employees. Since the labor market is currently having the opposite problem, Corbett sees that as a sign that a recession is not likely to occur.
There’s always a chance of something unpredictable shaking up the economy, however. the pandemic initially caused a recession, though it was mild. Worldwide events like the war in Ukraine can also ripple into the American economy. Large, global, economic events can trigger a recession, but that can happen at any time.
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