Recession in 2022? Eastern Carolina economist says it’s likely
GREENVILLE, N.C. (WITN) - The U.S. economy shrank for the second straight quarter, hitting a widely accepted rule of thumb for a recession.
The Gross Domestic Product (GDP) fell 0.9% in the second quarter.
But how exactly does the GDP going down signal a recession? East Carolina University economist Jim Kleckley breaks it down.
“If GDP grows, typically the unemployment goes down,” Kleckley said. “When GDP starts falling, the employment rate falls. So there’s a connection from that standpoint and that’s why the rule of thumb that two-quarters of GDP down gives you a recession.”
Kleckley believes a recession is possible next year.
“A lot of it has to do with inflation,” Kleckley said. “It’ll become more costly to get a mortgage, buy a car and pay back your credit cards because interest rates are going to go up. If that happens, we tend to reduce spending.”
So, what should people do? Kleckley says it depends on your job status and that there’s no reason for people to panic.
“Whether we have a job, don’t have a job or retired, we’re all in different places. That one GDP number doesn’t make life or your life any different than what it was yesterday,” Kleckley said.
According to a Politico poll earlier this month, 65% of registered voters, including 78% of Republicans, think the economy is already in a recession.
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