Even though the U.S. Bureau of Labor Statistics’ most recent jobs report was surprisingly strong – showing a total nonfarm payroll employment increase of 517,000 last month – a recession could still be on the horizon.
“There’s a 100% chance of a recession at some point. And it’s just a question of the arrival time, the depth, the duration, the severity of it,” said Mark Hamrick, Washington Bureau chief and senior economic analyst for Bankrate.com, in an interview this week with WWL’s Newell Normand.
Hamrick said that part of the reason is that “Federal Reserve Chairman Jerome Powell and his colleagues have been wielding a Thor-like hammer with respect to the interest rate increases here.” Just this week, the Federal Reserve Bank announced another rate hike, after seven last year.
These rate hikes make it more difficult for people to borrow money and can impact everything from credit card payments to mortgage rates.
They are intended to bring down inflation, which increased 6.5% during the 12-month period ending in 2022. Specifically, the Fed states the goal of raising interest rates is to “achieve maximum employment and inflation at the rate of 2% over the longer run.”
According to Hamrick, these rate hikes don’t appear to be “denting the job market severely,” with unemployment rates at just 3.4%. However, there have been significant layoffs recently at tech companies such as Google and Microsoft.
“And you know that the job cut announcements in tech are real,” said Hamrick. “They’re real.”
Still, Normand wondered why predictions regarding the jobs report were so off.
“Well, we live in remarkable times. I don’t have to tell you that, Newell,” said Hamrick. “And I think that, you know, it’s like the prognostications that come before a big football game and very often they’re wrong as well.”
Ultimately, Hamrick said that some of the economic worst-case scenarios “have absolutely been avoided.”
Hamrick and Normand also discussed the ongoing Russian invasion of Ukraine and how it may continue to impact the economy. Listen to the full conversation here.
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