WASHINGTON — Following the economy, these days can be difficult. It's hard to know who to believe. President Joe Biden recently said, "There is nothing inevitable about a recession."
Republicans are saying a very different thing. Senate Minority Leader Mitch McConnell called the economy "a Democrat-fueled inflation crisis."
Former economic adviser to former President Barack Obama, Larry Summers, is predicting a recession. It's hard to know the truth, however, after months of talking about inflation, the question is now whether a "recession" will happen or not?
First off, there is no specific definition of what a recession is.
However, the National Bureau of Economic Research defines it as "a significant decline in economic activity that lasts more than a few months."
It typically includes rising unemployment, a poor-performing stock market, lower household incomes, less consumer spending, a decline in home values and a decrease in the country's gross domestic product.
Since 1948, the country has averaged a recession every six years.
The beginning of the pandemic was technically a brief recession; the 2008 and 2009 housing crisis was the last major one.
It lasted a year and a half.
WHY IT MATTERS
Why should you care about a recession? Because one typically raises the possibility of layoffs, perhaps at your job. It can limit pay raises and many times, a loss in home values and a decline in 401K balances takes place.
So is one happening?
In short, the best nonpartisan answer comes from the Federal Reserve. Jerome Powell, chair of this powerful group, told Congress last week that his decision to raise interest rates to combat high inflation could cause a recession but at this moment, he doesn't know for sure.
"It's not our intention, but it's certainly a possibility," Powell said.
Aides at the White House know the fear of a recession on top of inflation worries could make it very difficult politically to keep control of Congress in this year's midterm election.
"We are not in a recession right now," White House press secretary Karine Jean-Pierre told reporters recently.
Jean-Pierre pointed to low unemployment and a rise in middle-class checking and saving accounts as reasons the country will avoid one.
All of this may have you wondering how should you prepare for a possible recession? Economists say you should lock in a new job or ask for that raise now and increase your savings and make less risky bets on the stock market.