Experts predict U.S economy is not headed into a recession

Published: Mar. 24, 2023 at 7:41 PM CDT
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ROCKFORD, Ill. (WIFR) - Financial and business experts stress the labor market is strong and the future of the economy is hopeful, despite some recent bank failures and mass layoffs.

“We have so many people leaving the workplace and not enough people to basically back fill those positions,” said Savant Wealth Management financial advisor Jeff Lewis.

After a wave of massive layoffs, bank failures and stock market crashes, financial experts reassure those who worry about the future of the economy that a recession isn’t in the future.

“The typical definition of a recession is two consecutive quarters of negative GDP growth,” Lewis said.

GDP growth stands for gross domestic product growth, says financial advisor Jeff Lewis. Positive growth means companies supply more goods and consumers are purchasing them. Negative growth means there’s less demand for products.

“Our GDP continues to expand in our economy,” Lewis said.

Lewis explains the failures of Signature Bank and Silicon Valley Bank, saying the two banks invested in long term bonds. That means the value of the bonds decrease as interest rates increase.

“The bank ended up having to sell those investments at such a discounted value and they couldn’t make up for those withdrawals that their customers were asking for,” Lewis said.

Caitlin Pusateri of the Rockford Chamber of Commerce says even though so many businesses look to hire employees, technology industries struggle since they mass hired during lockdown.

“Some of that contraction that you’re seeing now is just an adjustment from us all moving kind of back to a more normal pattern with things,” Pusateri said.

The Federal Reserve increased its short-term interest rate by a quarter percentage point Wednesday to help curb inflation.