It is only the beginning of February and signs of an oncoming recession are prominent. Stocks have been plummeting since the end of December only to extensively crash in the last two weeks.
The United States is long overdue for a recession, meaning what is coming has been brewing for years. Inflation is at an all-time high compared to just two years ago, prior to the Biden administration. These same signs happened in the 2008-2009 recession under the Obama administration.
According to Bloomberg, the rate of inflation is approximately 7%, double the rate from 2008 which hit 3.84%. The current rate of inflation exceeds the rate from 1982 in the 12-month span, which was .5% a month back then.
One cause of inflation would be related to the COVID-19 relief unemployment many received in early 2020 through March of 2021. Another related cause is the many stimulus checks that were sent as well as what is known as the “Great Resignation” where many have quit their jobs. This leaves many jobs open to fill and businesses are hiring in every department of their company.
Select states such as New York and California have fixed their unemployment issues however many other states are still experiencing the effects of the “Great Resignation.” This mass quitting has caused a rift in the economy, mimicking that of 2008.
This expectation of a potential war outbreak can immediately create the start of a recession in the event it does happen. At the moment, there is potential for war to break out overseas; Russia is moving its army around the border of Ukraine and is expected to invade after the winter Olympics in China. This has made prices of oil increase as reported by the U.S. Energy Information Administration.
The stock market has steadily been crashing over the past two weeks, this includes cryptocurrency. Crypto has a huge effect on our economy and around the world; when it crashes, everything will follow suit. Bitcoin is the major Cryptocurrency around the world and has dropped drastically in the last two months. Once the Bitcoin stock began to crash, NASDAQ followed not too far behind. The Federal Reserve has begun tightening on policies in the realm of stocks and bonds. This makes for stocks to crash harder for longer periods of time due to the policy change.
Prices on everyday items have already begun their rise, making the average American household suffer in the wake. The price of a gallon of milk last year was $1.97 which has now risen to nearly $2.15. The rise of these prices is beginning to cause panic among those who now cannot afford to feed their families. To put it lightly, there are many tell-tale signs of a recession. It is never good to have one but it means for better financial stability once the country comes out of it, give or take a year or two. . The only way out is to work together to ensure employees get paid their relative cost of living and modifying the unemployment system.