COLORADO — With inflation rates at a 40-year high of around 9%, a recession is looming.
The national gross domestic product (GDP) declined for a second straight quarter in a row at a rate of 0.9 percent according to the Bureau of Economic Analysis. Two quarters in a row of negative numbers is one well-known signal of a recession, however, it is not official.
Joe Craig, the economics department chair at UCCS, said even if the country did slide into recession, it could look a lot different from previous ones.
"If you talked to most people on the street, they wouldn't feel like we're in a recession," he said. "With employment so strong, with businesses still trying to find people and not being able to. That's not how it usually feels during a recession.
He said unemployment levels are at a good place, sitting at 3.6% as of June 2022. Craig said going into a recession with this high of inflation can be scary, but with more people working, it makes the situation better.
"Traditionally, when you start a recession, you tend to see the Fed [Federal Reserve] lowering interest rates because they're trying to keep us from going into recession here because inflation is so high already. They're jacking it up," Craig said.
However, he predicts that the actions of the Federal Reserve will bring down inflation soon.
"Instead of seeing prices rising at a 9% rate per year, we'll see prices hopefully rising at a 6% price per year, or like four and a half. Ideally, the Fed wants it down around 2%," Craig said.
The U.S saw two straight quarters of GDP decline two years ago during the start of the pandemic. Before then, GDP fell for four straight quarters during the Great Recession in 2008 and 2009.
Dennis Burton owns The Prime Cut Butcher Shop in Colorado Springs. His shop sells prime beef along with pork, chicken, and fish. Like other business owners in the current economy, he's simply trying to make a living. He says his prices have stayed high for the past six months.
"Whatever the market calls for is what our markup is. We keep it at that unless there's a huge drop or a huge increase on our purchasing side," Burton said.
Craig said labeling the economy as in a recession can seem scary, but this time around it might not have a large impact.
"The one thing that could change is that if people feel that we're in a recession, they might start spending less money, but people can feel that way whether we announced it or not."
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