Economists: Economic downturn almost inevitable

OAN NEWSROOM
UPDATED 1:05 PM PT – Wednesday, July 20, 2022

A rising number of economists believe the US and Western Europe will not be able to avoid an economic downturn. According to reports Wednesday, America is experiencing a decline in real disposable incomes, industrial production and real sales while real monthly GDP is also down.

Economists have pointed out that US President Joe Biden is highlighting low unemployment as an argument against recession, but Japan had recessions at times of low unemployment. Investors added, big banks are already preparing for the worst. The US government will released its advance estimate of second-quarter GDP on July 28 and if it comes in negative it means America is in a recession.

To add to the looming downturn, economists have also warned US housing prices could crash 15 to 20 percent amid fears of impending recession. According to Moody’s Analytics, 96 percent of America’s largest real estate markets are overvalued, which reduced housing affordability in recent years.

Meanwhile, runaway inflation and shrinking household incomes are preventing Americans from buying homes. Economists have said the inflation crisis may cause a housing market crash, which could lead to a broader economic crisis.

“As we’re seeing inflation on mortgage rates and interest, we are also seeing increases in construction costs that are really throwing the market off,” explained Jerry Howard, CEO of the National Association of Home Builders. ” What I’m really worried about is historically housing has led us into every recession since World War II.”

Economists warn supply chain shortages, rising costs of construction and increasing costs of loans may all lead to a massive crisis in the housing market.

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