The U.S. economy hasn’t been through a recession: Implications for the oil price problem and low-income countries

Former US Treasury Secretary Larry Summers said Thursday it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

“Historical experience suggests that the kind of inflation we have rarely returns to normal levels – target levels of around 2% – without some kind of recession,” said the head of the White House’s economic team, in an interview.

“Now, I don’t think that means we’re going to have something like we had after Covid or something like we had during the [2008] financial crisis, but I do think that we had a period of very substantial stimulus and I think the other side of that is likely to be a downturn,” he added.

There’s still a lot of strength in the U.S. economy that could keep it from falling apart as it did during the Great Recession, when a housing downturn led to the collapse of banks as well as household savings.

However, even Powell concedes that path has gotten narrower as the Fed has been forced to resort to drastic interest rate hikes to knock down inflation.

We need to think about this in a way that doesn’t involve a fire drill every time we have an oil price problem. It is reducing our fundamental dependency on unstable and problematic parts of the world for our energy.

With less than a week before the US Midterm elections, the world’s major oil producers will slash oil production by two million barrels per day, the biggest cut since the start of the Pandemic.

The Biden administration criticized the decision in a statement, saying it would hurt low and middle-income countries that are struggling with high energy prices.

The Stock and Bond Markets of JPMorgan Chase and the Predictions for the Next Three Months: How Markets and Finance will Survive

The stock of JP Morgan Chase, which is one of the 30 stocks that make up the Dow was down nearly 1%. JPMorgan Chase

            (JPM) is one of several big banks that will report earnings on Friday.

Stocks have tumbled this year due to worries about inflation and how the Federal Reserve’s aggressive interest rate hikes to fight surging prices may eventually lead to a recession. Stocks soared early last week, leading to hopes that the market had bottomed.

In the past few days sellers have come back with a vengeance. Friday’s mostly solid jobs report did not allay the fears of Fed rate hikes.

The Nasdaq hit a new 52-week low Monday. The Dow and S&P 500 are not far from their lows either. The Dow is down about 20% this year and is back in a bear market along with the other two major market indexes.

The bond market was closed Monday, but yields on the benchmark 10-year Treasury are currently hovering around 3.89%. Late last month, the 10-yearyield reached its highest level in more than a year, and was heavily influenced by mortgage rates.

The Fed vice chair discussed challenges in the housing market in a speech. Brainard noted that the moderation in demand due to monetary policy tightening is only partially realized so far, and that the transmission of tighter policy is most evident in highly interest-sensitive sectors.

The policy actions to date will have a full effect on activity in the coming quarters due to lags in transmission. The rest of the economy may soon slow down.

The fight against high inflation has gotten tougher and that is stoking fears that the rapid fire of interest rate hikes will lead to a downturn. Executives and professional investors have begun issuing more somber warnings.

It seems almost impossible to find one who doesn’t foresee a global downturn, with 98% of chief executives in the survey gearing up for a recession in the United States, and 99% prepping for one in Europe.

Before he became The Conference Board’s CEO, Steve Odland ran Office Depot, and he said companies want to do everything they can to cut back on overhead before a recession hits.

Meta’s Mark Zuckerberg has ordered his staff to prepare for layoffs in the future, according to reports. FedEx, a bellwether in the economy, has announced it will be cutting back on deliveries and closing stores as the CEO warns of a global recession.

“I don’t see a Great Recession,” says David Rubenstein, the co-founder of The Carlyle Group, and the author of “How to Invest: Masters on the Craft,” referring to the downturn that stretched from December 2007 to June 2009.

Right now, people are still spending, and many of them are not overextended. On top of that, companies have sound balance sheets, and the jobs market is incredibly strong. The unemployment rate went down to 3.5% in September.

Almost half of the people surveyed said they were going to hire more workers and 85% said they would increase pay in the next year.

“That’s unheard of from this group, going into a recession,” says Odland. You would usually hear that they’re cutting back. That they won’t increase wages.

The United States has had negative growth for two consecutive quarters, which is a rule of thumb for determining when the economy is in a recession. The National Bureau of Economic Research is a non-profit group that can determine if the economy is in a recession. And that determination could take months.

Amazon Sales, Wall Street Fears, and the American Dream: Analytical Analysis of a Faltering Economy by Michael Bezos

Amazon

            (AMZN) said in October it expects sales for the final three months of the year to be significantly below Wall Street’s expectations. The weaker forecast came as rising inflation and looming recession fears weigh on consumer purchasing decisions as Americans focus more on travel and dining out and less on buying discretionary goods.

In an exclusive interview with CNN on Saturday at Bezos’ Washington, DC, home, the business leader gave his clearest advice yet on a faltering economy.

According to the New York Times, Amazon will lay off 10,000 employees, the largest reduction in company history. There was a hiring freeze for its corporate workforce. The company is second only to Walmart in the number of people it employs in the United States.

Last month, Bezos warned his followers on the social networking site to “batten down the hatches.” Bezos said in the interview that the advice was meant for business owners and consumers.

Many may be feeling the pinch now, he added, but argued that as an optimist he believes the American Dream “is and will be even more attainable in the future” — projecting that within his own lifetime, space travel could become broadly accessible to the public.

There have been similar messages about the economy from other business leaders. Musk noted that Europe and China are experiencing a “recession of sorts” and admitted that demand for his cars was “a little harder to come by.” Musk also warned that Tesla

            (TSLA) would fall short of its sales growth target.