As the Federal Reserve continues its aggressive rate increases to fight decades-high inflation, concerns of an impending recession also continue to grow.
In a posting to its website last month, Goldman Sachs forecast a 35 percent chance of a recession in the next two years. One of the key metrics that Goldman Sachs uses in its forecasting is the “jobs-workers gap.” This is the difference between the total number of jobs (employment plus openings) and the total number of workers. The current difference is more than 5.3 million, showing that the labor force is at its most “overheated level” since the postwar era.
Previously, JPMorgan CEO Jamie Dimon had expressed concerns that the confluence of international events might lead to a recession. Freddie Mac also reported that they are forecasting a “modest” recession sometime in the next two years.
Many at the Fed are trying to rebuff the concerns of a recession. Though not all have been overly optimistic, many high-level individuals at the Fed have tried to maintain a tone of stability as the central bank works to lower inflations rates.
“For 2022, I expect core [personal consumption expenditure] inflation to be nearly 4 percent, before falling to about 2 ½ percent next year,” New York Federal Reserve President John Williams said at a conference early this month. “I expect inflation to further decline to close to our 2 percent longer-run goal in 2024. I expect the labor market and economy to continue to show strength and resilience. For 2022, I expect GDP growth to be around 2 percent and the unemployment rate to remain around its current low level.”