DENVER — We have a lot of headlines flying at us about the economy, often seemingly at odds with each other. Friday, the state of Colorado reported very strong jobs numbers with the unemployment rate falling to 3.4%.
“If we do enter a recession—or, if we’re in one already—it will be one unlike any we’ve experienced in recent cycles,” said Caleb Silver, Editor-in-Chief for Investopedia, acknowledging how difficult it can be to sift through the noise in the barrage of economic headlines. “We’re facing rising inflation up above 9%, where everything from food and energy to rent keeps rising on the one hand. We also have rising interest rates from the Federal Reserve to combat that inflation.
“Consumer spending is the most important part of our economy, because it does account for 70% of US GDP,” Silver explained. “If consumers start to pull back and start to tighten their belts—because they either fear a recession or they feel that they’re already in one personally—then you’re going to see businesses start to rein in spending as well, which would mean less hiring, which would mean less expansion. And that could really accelerate a recession.