The Economy Is Slowing Down. Is Recession Already Here?

Shopkeepers are buying less and factories are reduced – in other words, the economy is slowing down, and can even enter the recession.

On Wednesday, reports indicated a recession on two fronts. Retail sales fell 1.1% in December, as consumers cut their expenses in 10 of the 13 major categories tracked by the Census Bureau. The Federal Reserve said the US manufacturing output in December with a fall of 1.3%, the business also hit the brakes, the Federal Reserve said. Both were the second month of recession in one line.

The decline in retail sales is especially inauspicious because if both consumer and business continue to cut back, the economy may slow down at the point that it enters a recession. When people stop their expenses, companies cut back on employees who do not sell good or service. Economists have been predicting for months that the federal reserve’s interest rate can be pushed into recession by getting very expensive to borrow money to borrow money. If this happens, the current job market where abundantly in positions – there is a bright place for workers – can take a turn for worse, economists said.

Together, the day’s data “confirms the message that the recession is on its way and we can actually be already in it.” James Knightley said, in a comment, the main American economist in ING. “Companies are going to adopt rapid defensive strategies, so the number of strong jobs – the only decent set of numbers – this atmosphere still continues,”

Inflation is partly responsible for the recession. Products and services prices have increased rapidly since 2021, putting the domestic budget under pressure. Consumers have tapped into their savings and have purchased on credit cards to maintain their spending habits despite the price increase. But they may not be able to maintain it still.

Not only this, but in the crossfire of the Domestic Finance Federal Reserve, it has been caught against that much inflation. The Central Bank has increased its benchmark interest rate by 4.25 percent points since March, a step that increases the cost on consumer borrowings for things such as credit cards and car loans.

“American consumers are still tightening their belts in front of high inflation, rising credit costs and shrinking funds,” said BMO Capital Market Senior Economist Year Guatiary.

According to Fed data on industrial production, businesses have also tightened their belts, and cut production in a wide range of goods from cars to computer – a sign that they are working for low demand of their goods.

Economists of Wells Fargo Securities said in a comment, “It is clear that the manufacturing sector is already in recession.”

The interest rate of the fed appears to have an intended effect that the interest rate hikes and later at the slow pace of the economy. According to consumer prices data, inflation has slowed down in recent months. Not only this, but the manufacturer price index, which measures wholesale prices, fell 0.5%, the bureau of labor statistics said- and this store can translate to lower prices on shelves.

Together, the data accelerated the warning signs of recession for some time this year – and this means that the trimming, less standards of life, and savings for many people, among other difficulties. The Major Stock Index collapsed on Wednesday as the markets digested the news, with S&P 500 drowning more than 1% a day by noon.

“Investors are beginning to realize a recession,” Onda’s senior market analyst Edward Moya said in a commentary. “The economy is clearly in recession mode.”

The prices of cooling and the growing signs of a slow economy would probably encourage the Fed to slow down in its anti-opposing rate, the economists said. Market Watchrs expected Fed to raise their benchmark interest rate by 25 basis points – the shortest growth since March – according to CME’s Fedwatch Tool, which analyzes trading data.

Is there a question, comment or story to share? You can reach Diccon at dhyatt@thebalance.com.