These past few weeks, the majority of global businesses seemed to go on stand-by and on high alert due to fears of a recession that is pushed by the current economic situation.
However, Aneta Markowska, chief economist at investment banking company Jefferies, claimed that a recession is not imminent this 2022.
In a report, Markowska explained that households and businesses “still have a lot of cash, which makes their demand price and rate inelastic in the short-term.”
The unemployment rate in the United States (US) is also holding steady at 3.6% with millions of job openings still available. Markowska expects the national unemployment rate to continue to decline, bottoming at around 3.2%.
According to the National Bureau of Economic Research, recession refers to the significant decline in economic activity that is spread across the economy and lasts more than a few months. Several areas of economic activity are also considered potential recession signifiers — including real personal income, nonfarm payroll employment, and industrial production.
With household income and employment rates still appearing to be in good shape, Markowska said a 2022 recession would be “fake.”
“Put differently, the current recession exists purely in the imagination, not in the real world,” she said.
Markowska comes as JPMorgan Chase CEO Jamie Dimon, billionaire investor Carl Icahn, and the head of the World Bank sounded the alarm on a possible recession.
While Jefferies’ Markowska did not believe a recession was already underway or right around the corner, she conceded that an economic downturn in the U.S. was inevitable with the GDP coming at 2.2% and 0%, respectively.