A new study from Lending Tree’s personal finance site MagnifyMonkey shows that about 70% of Americans believe a recession is coming. Additionally, over half of those surveyed believe the recession will happen by the end of this year. The research included responses from 2,000 people.
What is not clear is what this will do to consumer spending. Inflation already has eaten into consumer pocketbooks. They have been hardest hit by high fuel prices and the increased costs of some foods. Add this to housing costs and occasional necessary purchases like clothing, and lower-class and middle-class Americans are tapped out from the standpoint of discretionary income.
Economists generally believe that the downturn will not be as deep as the Great Recession. Housing prices are unlikely to tumble 20% to 30%. Unemployment is unlikely to go as high as 10%. In fact, this could be a recession in which people do not lose jobs, though they do lose purchasing power. Also, the financial sector and banks are not in jeopardy as they were in 2008.
All in all, the next American recession will be caused by high oil prices as much as anything else. This is due to sanctions against Russian crude exports. The White House has stated that Americans may need to suffer because of support for Ukraine, which is the cause of these sanctions. If so, it will be a long, cold winter economically.
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