SCSU’s Banaian: What to Know About a Possible 2023 Recession
Many economists including St. Cloud State's King Banaian believe a recession will happen early in 2023. Banaian is the Dean, School of Public Affairs and Economics Professor at SCSU. He indicates we may already be in a recession but if we aren't we will be soon.
Banaian indicates signs that the nation is in a recession include slowing spending, soft employment numbers, and a slightly declining inflation rate. He expects inflation rates to come back down into the 4s and by mid year he expects those rates to drop to 4.0 or below. Banaian explains signs of coming out of a recession would include an increase in employment, an uptick in housing sales and an increased demand for gas. He says recessions typically last 6 to 8 months.
Gas prices in Central Minnesota saw a slight increase this week. Banaian doesn't expect that to continue and suggests the price could drop back down due to a lack of demand. He says demand this time of year is some of the lowest all year.
The FED is expected to raise interest rates. Banaian explains the motivation for this is to reduce the inflation rate. He says the Federal Reserve intends to take interest rates up so they exceed the inflation rate. The Federal Funds rate is at 4 1/2 percent which Banaian says would need to exceed the current 5.0 interest rate to swing the inflation rate lower. He says mortgage rates will likely settle in at around 7%.
If you'd like to listen to my conversation with King Banaian it is available below.