Some analysts predict that efforts to ease inflation may result in a mild, short-term recession.

We have had a lot of words bantered about in the past year or so – pandemic, war, inflation, stagflation and more.  Now another word is coming up with more frequency – recession. Basically, analysts are predicting that sometime in 2023, the medicine the Federal Reserve is going to apply to the economy to overcome inflation will slow the economy to the point of bringing on a “shallow” and short-lived recession.

If you look back, we have been relatively recession-free since the Great Recession of 2008.  We did have a short pandemic-induced recession two years ago, but that was expected when you shut the economy down for a period. Since then, the recovery has been sharp, with the main challenge being supply woes which have fueled the inflation we are now experiencing. Oil is a perfect example of this phenomena, as oil prices plunged to lows during the pandemic-induced recession and thus production was pared down. Bringing production back on-line has been a struggle.  You can’t just turn certain things off and on.

So is a recession in our future, and will it be mild as predicted?  There is no way of knowing, but we can say that any slowdown in the economy is likely to ease the threat of inflation and, in reaction, rates may ease a bit. Hopefully that will bring a better balance to the economy versus the “bust and boom” cycle we have witnessed over the past two-plus years. Let’s add another word to our equation – stability.  Economic stability would be a welcome sight for the future of our economy.  Even a leveling of home prices would be nice.