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A Recession Is Probably Coming, But the LA Times Wants You to Look on the Bright Side

Leah Barkoukis
Leah Barkoukis  |  June 24, 2022 11:30 AM

The U.S. Federal Reserve, European Central Bank, and Bank of England all took steps this month to curb inflation, but the measures aren't without risks to the global economy. Deutsche Bank predicts there's a 50 percent chance of a recession in the next year. Analysts at Citigroup said much the same, saying the probability of a global recession is nearing 50 percent. Billionaire Elon Musk, meanwhile, said a recession is "more likely than not" in the near term. 

Despite the economy experiencing negative GDP in a recession, people losing their jobs, homes, and businesses, contracting incomes, and forced lifestyle changes, the Los Angeles Times doesn't want you to be concerned. 

"Yes, a recession looks inevitable. But it may not be that bad. Here's why," reads the headline on the June 22 story. 

Behind the rhetoric, the reality is that recessions are a normal part of American economic life. The U.S. has had one, on average, every 6½ years since 1945.

And in the present case, most professional economists think any downturn now is likely to be relatively mild, with a fairly quick recovery.

“We’re calling for a small ‘r’ recession,” said Jack Ablin, chief investment officer at Cresset Capital. “It means it’s not going to be protracted and things aren’t going to fall apart,” as they did during the Great Recession and again in 2020 when the pandemic struck.

Many households are flush with cash, and jobs are plentiful with demand for new workers strong. Banks are well capitalized, which gives them a solid buffer against a business contraction.

What may be different this time is the public’s state of mind, coupled with a handful of unusual factors — first among them the grinding war in Ukraine. (LA Times)

It's true that "recessions are a normal part of American economic life," but there's no need to downplay the devastating effects they can have on everyday Americans just because Biden's in office.