Cause for concern and optimism about economy
WHAT EXPERTS ARE SAYING. >> TODAY PEOPLE ARE FILLING UP THEIR GAS TANKS AND COPING WITH NERVOUSNESS ABOUT THE ECONOMY. MATT WHITE SAYS HE HAS NEVER SPENT 86 DOLLARS TO FILL UP HIS TA.NK BUT HE IS TODAY AND IT MAKES HIM NERVOUS ABOUT A RECESSION. >> ALL THE PRICES KEEP GOINGP U AND UP. AT SOME POINT IT’S GOING TO CRASH AND GO DOWN. SO IT MAKES ME WONDER. I’VE GOT A SAVINGS ACCOUNT AND THE 401(K) AND RETIREMENT PLAN TO THINK ABOUT. >> I DON’T KNOW HOW WORKING PEOPLE ARE GOING TO BE AEBL TO AFFORD MEDICINE, GROCERIES, GASOLINE, CAR PAYMENTS, MORTGA,GE I DON’T KNOW. >> THAT IS THE CONCERN CARRIED BY THE PUBLIC. DO GAS PRICES CARRY AN OMINOUS SIGN OF TROUBLE AHEAD? HOW MUCH WILL THE AVERAGE PEONRS AND FAMILY STRUGGLE IN THE COMING MONTHS? HEFREN-TILLOTSON LAYS OUT A REASON FOR CONCERN AND FOR OPTIMISM. >> WINDS ENDING SLOWS DOWN, THAT IS A RECESSION. WE MAY SEE THAT FROM A COUPLE DIFFERENT SOURCES. A — HIGH GAS PRICES ARE TAKING A BIGGER PART OF PEOPLES BUDGETS. SO THEY ARE SPENDING LESS. >> HEFREN-TILLITSON SAYS THAT IMPACTS RETAILERS. LESS SPEING NDBY CONSUMERS TRIGGERS LAYOFFS. INFLATED NUMBERS IN THE HOUSING MARKET IS ALSO CAUSE FOR CONCERN. THAT ALONG WITH A NEAR 12-YEAR HIGH IN MORTGAGE RATES. IF PEOPLE ARE AFRAID TO BUY THAT COULD TRIGGER LAYOFFS IN THAT INDUSTRY. >> IF ALL OF THESE THINGS CONTINUE TO COMPOUND AND SNOWBALL. YOU WILL HAVE A BIG DROP IN SPENDING AND THAT IS WHAT TYPICALLY LEADS US INTO A RECESSION. >> HEFREN-TILLOTSON SAYS THAT’S THE PATH TO A RECESSION. BUT ON THE OTHER HAND THERE’S NO CERTAINTY IT’S ACTUALLY GOING TO HAPPEN. >> CERTAINLY NOT THE BASE CASE RIGHT N.OW THE ECONOMY IS STILL FIRING ON ALL CYLINDERS. ON A LOT OF CYLINDERS THE ECONOMY IS DOING VERY VERY WELL. >> THEY POINT TO OTHER SIGNS THAT THE ECONOMY IS DOING OK RIGHT NOW. THAT IS JOB OPENINGS OUT NUMBER UNEMPLOYMENTY
Cause for concern and optimism about economy
Updated: 6:23 PM EDT Jun 8, 2022
As the public stresses over soaring gas prices and whether that represents an ominous sign of a crippling recession, insight from Hefren-Tillotson’s Wexford office leans towards patience to see how things play out.Jayme Meredith, a Hefren-Tillotson senior vice president, said if indicators continue to tumble as they are during the next several months, a recession is possible.He points to inflation numbers for common goods that could put fear in spending.”When spending slows down, that’s a recession,” he said. “And we may see that from a couple of different sources: A, high gas prices are taking a bigger part of people’s budgets, so they’re spending less,” he said.Meredith said less spending creates a domino reaction felt by retailers. When fewer consumers are shopping, revenue drops and layoffs could fall into play.Meredith also points to prices in the housing market, along with a near 12-year high in mortgage rates that could scare off buyers and in return, trigger layoffs in that industry.”If all of these things continue to compound and snowball, you have a big drop in spending, and that’s what typically leads us to a recession,” he said.However, Meredith said that’s in theory, without consistent evidence that it will actually happen.For example, he says consumers are still spending and available jobs outnumber unemployment two to one, so there’s no guarantee a recession will happen.”That’s certainly not the base case right now. The economy is still not firing on all cylinders, but on a lot of cylinders, the economy is doing very, very well,” he said.
As the public stresses over soaring gas prices and whether that represents an ominous sign of a crippling recession, insight from Hefren-Tillotson’s Wexford office leans towards patience to see how things play out.
Jayme Meredith, a Hefren-Tillotson senior vice president, said if indicators continue to tumble as they are during the next several months, a recession is possible.
He points to inflation numbers for common goods that could put fear in spending.
“When spending slows down, that’s a recession,” he said. “And we may see that from a couple of different sources: A, high gas prices are taking a bigger part of people’s budgets, so they’re spending less,” he said.
Meredith said less spending creates a domino reaction felt by retailers. When fewer consumers are shopping, revenue drops and layoffs could fall into play.
Meredith also points to prices in the housing market, along with a near 12-year high in mortgage rates that could scare off buyers and in return, trigger layoffs in that industry.
“If all of these things continue to compound and snowball, you have a big drop in spending, and that’s what typically leads us to a recession,” he said.
However, Meredith said that’s in theory, without consistent evidence that it will actually happen.
For example, he says consumers are still spending and available jobs outnumber unemployment two to one, so there’s no guarantee a recession will happen.
“That’s certainly not the base case right now. The economy is still not firing on all cylinders, but on a lot of cylinders, the economy is doing very, very well,” he said.
