With gas prices at almost $8 a gallon in some areas of Southern California, inflation at a 40-year high and interest rates on the rise, it is no surprise that many Americans are wondering about the possibility of a recession.

What You Need To Know

  • The UCLA Anderson School of Management's June forecast predicts US economic growth will slow to 2.0% in 2023 and 1.9% in 2024

  • Although a recession is unlikely at this time, a deep economic slowdown with the highest risk of recession is predicted to occur in the middle of 2023

  • Unemployment is expected to rise in 2023 as the Fed increases rates and the economy slows

“We’re going out and we’re seeing these really high gas prices and we’re seeing shortages on store shelves and so it feels like the economy is doing poorly, even though on average individuals are saying they’re doing OK," Leo Feler, a senior economist with the UCLA Anderson School of Management told “Inside the Issues” host Alex Cohen.

Where Americans think and feel the economy is headed might actually have an effect on how it plays out, Feler argued.

Feler and his colleagues at UCLA are forecasting an economic slowdown with inflation up 8% year-over-year and labor markets being extremely tight. Even though Americans are faced with uncharted territory, Feler does not think it is time to call it a recession.

By mid-2023, Americans could see the economy come to a grinding halt. Growth could decrease from 2.2% yearly to 1% with higher rates on unemployment and supply chain constraints, according to the national forecast.

“There's not much the Federal Reserve can do in the short term to increase supply. What they can do is cut back on demand. And the way they cut back on demand is they raise interest rates,” Feler explained.

This step might be the only way to prevent people from making big purchases during an economically unstable time, according to the national forecast.

“Unless the situation gets really dire, the Fed really has to tighten monetary policy and raise interest rates quite a bit, unless there's continued shots from Russia, Ukraine, unless there's continued lockdowns in China, we really don't foresee a deep recession,” Feler said. “We don't think that the economy is going to have this kind of painful contraction that we've had in past recessions.”

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