Are we in a rolling recession? Here's what that is, and why economists think we are.
The word "recession" was in the air in 2022 and some economists say a downturn is imminent.
Though inflation has slowed and gross domestic product grew in the fourth quarter, it may be the calm before the storm. Most economists are still predicting some form of recession, probably in the first half of 2023, but the vast majority believe it will be mild. That means it'll likely look more like recessions of the early 1990s and early 2000s than the two most recent slumps.
Yet some economists say we're already in a rolling recession.
What is a rolling recession?
While a recession is a decline in economic activity across the board, a rolling recession impacts certain regions or industries more than others. While some sectors or geographic areas experience downturns, the national economy may continue to grow, according to the Federal Reserve Bank of San Francisco.
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Are we in a rolling recession?
According to Charles Schwab economists, we are. For example, some economists believe the housing market and manufacturing are both in rolling recession territory.
"We view the best case scenario as one of an ongoing roll of weakness through the economy, with offsetting pockets of strength," analysts Liz Ann Sonders and Kevin Gordon write in a Charles Schwab market commentary.
Top Citi economist Nathan Sheets told Financial Review we're likely to see rolling recessions that start in one place and spread to others across the globe. .
Sheets predicts Europe and the United Kingdom will be the first to topple into a recession, with the U.S. following closely behind in mid-2023 when we begin to see the full effect of Fed tightening. And while other countries like South Korea, Brazil, Chile, Mexico and Russia will also see downturns, China's economic growth may even accelerate.
What happens during a recession?
Recessions happen when there's a major pullback in economic activity, especially consumer spending and business investment. Companies lay off workers and slow hiring, unemployment rises and wage growth stalls.
A mild recession could cost the economy almost two million jobs, and a severe one three to four million jobs.
GDP growth also tends to shrink because lower demand and employees means fewer goods and service are produced. Housing prices may also decrease.
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This article originally appeared on USA TODAY: What is a rolling recession? What it means and why we might be in one.