As economists debate the possibility of a recession next year, the US economy is in recession. He wrote that this means that the economy can grow at a slower pace, or worse, economic performance can slow, population and businesses affected by high inflation. Yahoo Finance.
The US economy in the first quarter of 2022 It shrank 1.6 percentConsumer prices in the United States rose 8.6 percent in May 2022 compared to the previous year. Investors are increasingly concerned that the Federal Reserve (Fed), which will play the role of the US Federal Reserve, will be able to shape events to reduce inflation without the economy entering a recession. It may be important to know that we are talking about a recession if economic performance has declined for at least two consecutive quarters.
There is an uncomfortable situation in the form of stagflation, and even the worst path to equilibrium, stagnation, can be created.
Summed up Mohamed El-Erian, an economist and president of Queen’s College at the University of Cambridge.
The expert shares the view of many, such as the Bank of America’s monthly fund manager survey, which says they are now more afraid of stagflation since June 2008.
Europe in particular is at risk
According to the University of Michigan Consumer Sentiment Index, people agree, as consumers fear stagflation, according to an ING survey.
Households are exposed to high inflation as their purchasing power continues to decline. The survey found that only 30.8 percent of households believe their wages will rise above inflation over the next five years.
Stagflation is not expected to be confined to the United States. The World Bank cut its global growth forecast for this year from 4.1 percent in early June to 2.9 percent.
We can see huge risk factors around the world, including heightened geopolitical tensions, expanding high inflation and protracted interest rate raising cycles. Stagflation is reminiscent of the 1970s, and rising borrowing costs and food difficulties can be a major problem.
– wrote in the report.
Europe is particularly vulnerable due to its exposure to Russian natural gas and Ukrainian grain. Nor is it a coincidence that the Eurozone PMI fell to its lowest level in 16 months in June.
Jack Allen Reynolds, chief European economist at Capital Economics, reacted simply to the data: “Stagflation has arrived.”
(Cover Image: Spencer Platt/Getty Images)
