NEW YORK–With economic indicators increasingly showing a long-anticipated recession in the U.S. is either here or approaching, the new question is over just how long such a downturn might last. A new report offers some potential answers.
CNBC, citing data from the economists at the National Bureau of Economic Research — the Business Cycle Dating Committee — which identifies when a recession officially starts and stops, noted the committee states on its website, “Expansion is the normal state of the economy. Most recessions are brief."
Federal Reserve economists are predicting that there will be a mild recession later this year, "with a recovery over the subsequent two years," according to the minutes of the Fed's March 21-22 meeting, as reported by both CNBC and CUToday.info.
“Because the economists blame the recent turmoil in the banking industry for the impending economic trouble, they expect the pain to endure for longer than usual,” CNBC said, citing the NBER statement, "Historical recessions related to financial market problems tend to be more severe and persistent than average recessions.”
“Indeed, the longest recession in recent decades was the 2008 financial crisis, which slogged on for 18 months,” CNBC said.
A Tricky Aspect
The news outlet quoted Preston Caldwell, the chief U.S. economist at Morningstar, as stating another tricky aspect to the current economic conditions is that the Federal Reserve is deliberately trying to slow economic growth in the hopes of getting inflation under control. Yet it is the cutting of rates that usually helps the economy rebound from downturns.
Still, Caldwell expects that the central bank will tame inflation by the end of this year, and be able to start bringing rates down in 2024, at which point the economy would start its recovery, CNBC reported.
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