“We are likely to have a recession this year,” shared Curtis Dubay, chief economist for the U.S. Chamber of Commerce. “However, I do not want to invoke fear . . . that’s because the U.S. economy is very resilient,” continued Dubay, speaking at the International Dairy Foods Association’s (IDFA) Dairy Forum.
“There’s a 65% chance of a recession,” Dubay further explained to the audience of over 1,100 attendees. “Rising interest rates are reducing demand. Consumers are also spending down savings. Lastly, inflation is reducing consumers’ buying power,” said the economist. “These statistics are largely baked,” he shared, meaning that it has already taken place.
“The housing market will be hit first in a recession,” said Dubay. “At the beginning of 2022, 30-year interest rates hovered near 3%. We start this year in the 6% range. Lower home sales, in turn, seep out into the economy as all the things that go into homes sell at a slower rate.” At year’s end, home sales were down 17.8% when compared to 2021. That’s according to data from the National Association of Realtors.
The higher interest rates that have been impacting home sales will not be going away any time soon, predicted Dubay.
“There will be no cuts in the federal fund’s rates until inflation is very clearly in the 2% goal range. That may take until 2025,” predicted Dubay when speaking to the international gathering of dairy processors.
As for prices of all goods and services?
“Remember, prices seldom fall during a recession,” he said. “Price rises do stall, however.”