Should you prepare now?
The 2008 recession was debilitating for families, businesses, and the economy. It shaped our ideas on finances and security. 13 years later, it seems as though we could be heading in that direction.
It’s true: a 2022 recession is unlikely. Buyer confidence –– and demand – remains strong. Instead, the recession will likely take place in 2023 or 2024, when the consequences of actions and activities of 2020 and 2021 take effect.
This will drive consumer spending down, triggering a recession.
Higher Inflation
It’s become apparent that inflation isn’t transitory. While many Americans continue to spend even in the wake of higher inflation, if inflation continues to rise, consumers will possibly cut back on spending.
Vaccine Mandates
The Biden administration has lauded the private company vaccine mandate as a win for the economy and the country. However, 31% of the adult population still isn’t fully vaccinated. That means 31% of people could be out of jobs soon. This job deficit will temporarily increase income for vaccinated workers, as companies go on recruitment drives to acquire vaccinated employees. In the long term, consumer spending will decrease as laid-off workers move to smaller companies with smaller paychecks.
End of Stimulus
When the Fed stops injecting large amounts of cash into the economy, demand will dwindle. Much of the recession has been avoided by a stimulus that enabled potentially struggling people to continue –– and increase –– their spending habits and gave the population a security blanket. Without that security, demand will decrease drastically, as consumers are more cautious about how they spend their money.
These are just some warning signs to watch for in 2022. Since it takes a year for the economy to respond to these events, you can expect the recession in 2023, 2024 for the latest.