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There’s A Lot Of Talk About Recession. What Should You Believe?

Evan Ramstad
Star Tribune

WWR Article Summary (tl;dr) Evan Ramstad takes a look at some of the key questions and influences as to whether or not we are heading for a recession

Minneapolis

In spring two years ago, the coronavirus pandemic threw the U.S. economy into recession. Last spring, the proliferation of vaccines swung it into a rapid expansion.

This spring, speculation abounds that another recession is around the corner, maybe late this year or next year.

With official data expected later this month, the U.S. economy likely grew between 1 and 2% in the first three months of the year. But last year’s snapback produced a faster drop in unemployment and bigger spike in inflation than nearly everyone expected. And balancing that out could require some bitter medicine: higher interest rates.

“The debate over the necessity of more rapid interest rate hikes, and the associated debate over whether that will push the economy into a recession, parallels, with a little bit of a lag, the acceleration in inflation rates,” said V. V. Chari, an economist at the University of Minnesota.

Recession chatter dominated economists’ analysis of new inflation data released last this month. Consumer prices rose 8.5% in March, likely the peak in a series of increases that started last April out of the 2% range targeted by policymakers at the Federal Reserve.

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