MADISON, Wis.–With the Federal Reserve having again raised rates at its latest meeting, the question for many is when will the next recession take place. The answer, according to CUNA Mutual’s chief economist, is later this year.
“We believe the economy could experience a mild recession in the second half of 2023 as consumers’ excess savings has been eliminated by higher spending on higher priced goods and services by this summer,” wrote Steve Rick in CUNA Mutual’s newest Trends Report, which is based on data compiled by CUNA. “We are currently forecasting real gross domestic product to flatline in 2023 with essentially no growth, which is below the long-run average of 2% growth rate.”
Other Contributors
According to Rick, other factors contributing to the recession are higher interest rates, lower stock and home prices, and satiated consumer demand for many durable goods.
“During the pandemic, a dramatic shift occurred in the composition of household spending, where the amount spent on services declined while spending on goods increased,” stated Rick. “Over the next few years, as we transition from a COVID pandemic to an endemic, consumer spending will transition back towards the pre-pandemic trend of higher spending on services. This trend was mainly driven by an aging population demanding additional healthcare services.”
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