Investors are jittery. Home sales are plummeting. Squeezed by food and gas prices, Americans are driving less and spending more to put food on the table, constraining their budgets. Yet despite this unsightly economic picture, the U.S. likely isn’t in a recession yet.
“The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook,” the International Monetary Fund said in a blog post on Tuesday, July 26. Slowing growth in the U.S., the European Union, and China, the world’s three largest economies, would have knock-on effects for the rest of the world.
“The world may soon be teetering on the edge of a global recession, only two years after the last one,” the IMF said.
A recession is commonly defined as two consecutive quarters of shrinking gross domestic product
According to most economists, the clearest signals of a recession are an increase in layoffs and a slowdown in hiring. Although layoffs have risen to an eight-month high, they remain at a historically low level, while employers continue to hire workers as fast as they can find them.
While the U.S. may not be in a recession now, it may be only a matter of time until one starts, some economists say. Many believe the country will soon enter a recession if the Federal Reserve raises interest rates too aggressively.
Most recessions in history are preceded by accelerating inflation, and hence, the Fed may raise rates too far, too fast for the economy to handle,” researchers at Morgan Stanley wrote in a report
