Beth Ann Bovino, the head U.S. economist for S&P Global Ratings, said that the chance of a recession hitting the United States is increasing.
When asked during a Yahoo Finance panel about the prospects of a recession occurring, she said that American households, including individuals who are lower-income, “are still sitting on a nice bit of savings.”
“The reason why is because we spent so many months in quarantine,” she asserted. “Many people didn’t spend and go out and spend ... even low-income households have a little bit of a cushion. Higher-income households have a much more, although that’s being hit by certainly the stock market disarray at this point in time.”
However, Bovino concluded that Americans are eventually “going to close their pocketbooks,” which “doesn’t bode well” for the economy in the near future.
Because of that, S&P Global Ratings sees “the risk of a recession increasing,” she said Tuesday. “We now have it at about 30 percent.”
“We see the risk, though, much larger in 2023, when those cumulative rate hikes from the [Federal Reservce] to attack inflation starts to weigh on mortgage payments and monthly payments for people, going forward,” Bovino continued.
U.S. inflation rose by 8.3 percent in April as compared with the previous year. Although that figure is slightly lower than the 8.5 percent spike in March, it’s still near the 40-year high for inflation.
The White House and Democrats have struggled with messaging around inflation, often blaming price increases on the Russia–Ukraine war or big corporations. It’s driven Amazon founder Jeff Bezos and current richest person Elon Musk to criticize the administration’s economic policies, warning that printing trillions of dollars via spending packages triggered the price surge.
“Remember the Administration tried their best to add another $3.5 TRILLION to federal spending,” Bezos wrote Monday on Twitter. “They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40-year high.”
“It’s definitely a risk,” Blankfein, whose former company took billions of dollars in relief payments from the Obama administration after the 2008 economic downturn, told CBS News over the past weekend. “If I were running a big company, I would be very prepared for it. If I was a consumer, I’d be prepared for it, but it’s not baked in the cake.”
Currently, he estimated that a recession is “a very, very high risk factor.”
