“Where is the economy going?” This is what experts are saying about America’s uncertain economic future

You’ve heard of it: inflation, recessionan uncertain economic future, at best.

To look at the economic fog from different angles, CBS News Chief Political Analyst and Senior National Correspondent John Dickerson turned to the professionals.

“I would say the economy has overheated,” said Lloyd Blankfein, formerly the chief executive of Goldman Sachs and now its senior chairman.

“Everybody’s saying, ‘Where’s the economy going?'” he said. “And I think a good point to make is that it’s hard to predict the future, but right now it’s hard to predict the present.”

And in the world of economics, there is the big picture and the smaller picture for each household.

“Even if you do well, when you hear ‘recession,’ when you hear ‘inflation at a 40-year high,’ it makes you feel like, whoa, what’s going to happen to me?'” said author Michelle Singletary. and personal finance columnist for The Washington Post.

On Wednesday, the Federal Reserve announced that it was again raise interest rates to combat inflation, which in June stood at 9.1% more than a year ago, the biggest increase in more than 40 years. And on Thursday, the government reported that the gross domestic product fell for the second quarter in a row, a sign that the economy may be in recession, though we’ll have to wait months to see if economists assign that formal term.

“There is a not insubstantial possibility that we will have a recession,” Blankfein said. “I don’t think it’s baked in the cake. There are people who say we’re already in a recession. A lot of people say a soft landing is very, very unlikely.”

The soft landing is what the Federal Reserve is trying to engineer: raise rates to cool the economy without starting a job-killing recession. It is very difficult to do.

“In most recessions, you don’t have a soft landing,” Blankfein said. “The Fed is tightening and jobs are being lost, companies are not just cutting back on their hiring plans, they’re cutting back. We’re starting from a different place. The financial system is in good shape. There are more jobs work than people to fill these jobs.”

Singletary said it’s “very important” that people pay attention to how the Fed’s actions can affect their financial decisions.

“What the Fed is doing is trying to lower inflation. So by raising rates, it’s going to cost you more if you need a mortgage,” he said. “It will cost you more if you need an auto loan. It will cost you more if you have credit card debt.”

So how did we get here? Well, the pandemic seems to have played a role.

“Fifty years from now, when they’re writing about the history of the period, they’re going to put it in its place and it’s going to fit neatly and neatly into a pattern,” Blankfein said. “But where I’m sitting now, it looks very different. We shut down the economy. People were kept out of their jobs. It was like we turned off a valve. It wasn’t the natural order of things.”

The unemployment it now stands at 3.6%, roughly where it was before the pandemic, and almost a 50-year low. However, 58% of Americans are believed to be living paycheck to paycheck.

“This is the category that is the hardest,” Singletary said. “It makes me cry because people say, ‘Well, what do you advise them?’ I wish I had an answer, but no, other than “You need to spend smarter. Save as much as you can. And perhaps, housing, this is one of the most important areas of people’s budget. If you can, live with someone or have a roommate.”

Singletary and his family live by that advice. Their three children in their 20s live at home, saving their money instead of putting it towards rent.

But if you’re comfortable, he said, don’t take any rash actions: sell stocks that will recover over time if you hold them, and keep spending. He worries that the public could fall into a fatal loop that will scare the country into an even worse economic point.

“These are the people we need to not panic about because we need you to spend,” Singletary said. “We need you to go out to restaurants. And when you do go out, tip that server more than 20%. You know, be generous. You can afford to be generous. Because if they pull out, so do we” “It’s trying to avoid, which is a deep recession, will happen.”

For Blankfein, it is unclear whether we will enter a recession.

“We might go into a recession, maybe not. But if I was managing the risk at my old job, managing the risk of a big building or my home, if I thought there was a 30% chance, let alone a 60% chance of a severe slowdown, I would start being very conservative about what I spend,” he said.

“What difference does it make if Lloyd Blankfein thinks there’s a 70% chance or a 30% chance? A 30% chance is a very big risk to go to bed every night and worry about what might happen next week or the next one. a couple of months,” he said.

Singletary is the director of a ministry at her church where she helps parishioners with their finances. Recession or no recession, he has a consistent sermon.

“The one thing I hope we learn now, and across all types of economics, is not to rely so heavily on debt,” he said. “We’re living the American dream with borrowed money. We borrow for our homes. We borrow for our cars. We borrow to send our kids. We borrow to go on vacations. We even borrow for food out when we put it in. the credit card.

“And then when we have an economic downturn, people don’t have a cushion. And so I try to make people hate debt. I hate debt. I hate debt so much that if I were a person, I’d slap it. That’s how I hate”.

Singletary and Blankfein agree on this: There is an overabundance of economic and political experts that makes people nervous. While living in the micro, they advise taking a long-term, macro view, because over time, the American economy has always recovered.

“The system we have is somewhat agile and resilient,” Blankfein said. “You’re always anxious about things that aren’t resolved versus things that happened in the past that are already in the can and already in the history books and we know the world hasn’t ended.”

Singletary said it’s okay to feel nervous.

“Don’t panic. Well, no, you know what? Panic. Go ahead. Scream…” he said. “Let him out because we don’t have to tell people not to come in. It’s human to panic when you see all these headlines… But don’t act on that panic in a way that makes it worse for you.”

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