Thursday, August 11, 2022
BusinessIs US economy really in Very High Risk of recession?

Is US economy really in Very High Risk of recession?

Ben Bernanke, former chairman of the US central bank Federal Reserve, has said that the economy appears to be moving towards stagflation for the first time since the 1970s. Stagflation is a situation when the growth rate of the economy is decreasing and inflation is increasing.

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Everything is not going well in the US economy. Fuel prices have skyrocketed. Consumer sentiment has declined. In early May, it dropped to the lowest level since 2011. US inflation grew 8.3 per cent in April. People are suffering due to rising inflation. On the other hand, the growth of the economy is expected to be slow.

Ben Bernanke, former chairman of the US central bank Federal Reserve, has said that the economy appears to be moving towards stagflation for the first time since the 1970s. Stagflation is a situation when the growth rate of the economy is decreasing and inflation is increasing.

Bernanke said that such a situation was seen in the 1970s. Then people’s jobs were being lost, but the prices of things were increasing in the grocery store. The problem with the supply chain is worrying, he said. The credibility of the Federal Reserve is at stake. If it fails to control inflation, people’s trust in it may decrease.

On the other hand, Lloyd Blankfein, senior chairman of Goldman Sachs, has also asked companies to be prepared for recession. He said that the risk of recession is very high. He said that if I am running a big company then I should be ready for it. He said that the Federal Reserve has a strong weapon to control inflation. He is also taking necessary measures.

Goldman Sachs has downgraded its growth forecast for this year. It has said that this year the growth of the US economy can be 2.4 percent. Earlier it was estimated to be 2.6 percent. It has lowered its forecast for next year’s growth from 2.2 per cent to 1.6 per cent.


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There has been a big drop in many asset classes. So far this year, bitcoin is down 33 percent. The Nasdaq is down more than 25 percent. The S&P 500 is down nearly 16 percent. On the other hand, there is a rise in crude. The dollar has also strengthened. Brent crude is up 41 per cent so far this year. The dollar has strengthened nearly 9 percent.

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