Why This Recession Is Different than All The Rest

The comments below are an edited and abridged synopsis of an article by Peter Reagan

North Americans are feeling the pinch these days, and the IMF is predicting a massive global slowdown.

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It expects the world economy to grow 3.2% in 2022 before slowing to 2.9% in 2023, a downgrade of 0.4 and 0.7 percentage points, respectively, from April. It said the revised outlook indicated the downside risks outlined in its earlier report were now materializing, including soaring global inflation, China’s slowdown and the war in Ukraine.

But while the global GDP outlook isn’t good, the Biden economy could also be heading for serious trouble over the next few months.

The US Bureau of Economic Analysis said that the second-quarter slowdown revealed another disturbing fact that could be a signal of even more economic malaise to come:

“Real GDP decreased less in the second quarter than in the first quarter, decreasing 0.9% after decreasing 1.6%. The smaller decrease reflected an upturn in exports and a smaller decrease in federal government spending that were partly offset by larger declines in private inventory investment and state and local government spending, a slowdown in PCE, and downturns in non-residential fixed investment and residential fixed investment. Imports decelerated.”

This seems to reveal that US exports saved the day. But even those gains were offset by various declines and slowdowns. That isn’t good, especially if exports were to decline in this year’s third quarter.

The next BEA release is due on August 25, 2022. Assuming there are no major changes between now and then, the cement will have dried on this recession’s start.

Unfortunately, red-hot 9.1% inflation looks to be one of the causes of a slowing economy (people spending more carefully). That also happens to be one of the Fed’s mandates.

Up for discussion: Necessary Fed rate hikes aggravate the economic damage, and protecting your savings from a different kind of recession with physical precious metals like gold and silver.

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