Connect with us


Reasons For a possible US Recession in 2022



US recession

Information gathered, that a growing chorus of economists and financial experts predict the US is headed into a recession, defined as two sequential quarters with a significant, pervasive decline in economic activity.

Why it matters is because of the past US recession have been marked by widespread layoffs, bankruptcies, higher borrowing costs and unstable prices in the stock market.

The US recession, possibly the economic storm clouds are approaching, this is after years of low unemployment rates and high market growth.

Let’s take a quick reasons and what we could expect In the nearest future and also for the upcoming US recession financial experts have predicted.

what happens in a recession?

It’s always helpful to go back and review recession outcomes so that we can manage expectations. While every recession varies in terms of length, severity and consequences, we tend to see more layoffs during economic downturns. Accessing the market for credit may also become harder and banks could be slower to lend because they’re worried about default rates.

If the Federal Reserve continues to raise rates to clamp down on inflation, then we might see an increase in borrowing costs. So, even if you qualify for a loan or credit card, the interest rate may be higher than it was in the prior year. We’re already seeing this in the mortgage markets where the average rate on a 30-year fixed mortgage is over 5%, the highest level since 2009.

The silver lining in some recessions is that, as rates go up and inflation cools, prices on goods and services fall and our personal savings rates increase. We may also see an uptick in entrepreneurship, as we saw in 2009 with the Great Recession, as the newly unemployed are inspired to turn a small business idea into reality.

What if debts jumps and loans become harder to access?

As the Federal Reserve continues to raise interest rates to curb inflation, adjustable interest rates may increase — ratcheting up the APRs of credit cards and loans,and making monthly payments more expensive. Reach out to your lenders and card issuers to learn about low interest credit options. See if you can refinance or consolidate debts to a single fixed rate loan

In past recessions, some banks were hesitant to lend as often as they did in “normal” times. This can be troubling if your business relies on credit to expand, or if you need a mortgage to buy a house. It’s time to pay close attention to your credit score, which is a huge factor in a bank’s decision. The higher your score, the better your chances of qualifying and getting the best rates.

My final note is that it’s important to remember that recessions are a normal part of the economic cycle. Long-term financial plans will always experience some declining periods. Since World War II, the US has had about a dozen recessions and they typically end after a year or sooner. By contrast (and some better news), periods of expansion and growth are more frequent and longer lasting.


Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.