Page 11 - BusinessWest May 30, 2022

“This is a very unusual period of time. Because there are so
many different things going on, between supply chain issues
driving costs up, the cost of gas being driven up by government
That classification, and the acknowledg- ment that Russia, and Ukraine, both export large amounts of wheat and fertilizer, speaks volumes about just one of the many forces — most of them unpredictable in nature — that are impacting the national and global economic scene. And they’re also making it difficult to determine what will happen in Q2, Q3, and well beyond, said Nakosteen, who, like Regan, said that despite those aforementioned headwinds, there are many positive signs when it comes to the economy.
“The GDP decline in both the state and
the nation was almost more a technical issue, because all the numbers that went into it, except those regarding inventory, were strong,” he explained. “The job market is strong, retail sales are good ... so the economy is actually pretty strong, and the Fed thinks it’s too strong.”
Which prompted two interest-rate hikes this year, including a half-point increase late last month, designed to slow the economy. But with those rate hikes comes talk of inflation, said Nakosteen, adding that, historically, one has led to the other.
These factors add up to a lot of watching and analyzing for people like Canina, who said there is a lot to digest, including current loan activ- ity, or the lack thereof, as well as inflation and the dreaded inverted yield curve — a success- ful predictor of many recent recessions — and the impact of rising interest rates on consumer spending as the cost of borrowing increases.
Starting with a look at loan activity, he said it has
Economy
Continued on page 43
regulation ... it’s really hard to pinpoint whether it’s true
economic growth that’s driving inflation or if it’s purely
government-driven. So it’s hard to say exactly what’s going on.
BRIAN CANINA
”
talked with these experts and asked them to slice through the complex confluence of issues and try to anticipate what will happen with the economy in the coming months and quarters.
On-the-money Analysis
It was the late U.S. Sen. John McCain who, in 2015, described Russia as “a gas station masquer- ading as a country.” Paying homage to that quote, Nakosteen, echoing others, said Russia is a “a gas station with an army.”
“
retail sales are good ... so the economy is actually pretty strong, and the Fed thinks it’s too strong.
BusinessWest. “Because there are so many differ- ent things going on, between supply chain issues driving costs up, the cost of gas being driven up by government regulation ... it’s really hard to pinpoint whether it’s true economic growth that’s driving inflation or if it’s purely government-driv- en. So it’s hard to say exactly what’s going on.”
And even harder to project what will hap- pen. Nakosteen does not anticipate continued decline in GDP for the second quarter, which, if it did happen, would be the technical definition of recession. But he’s not projecting strong growth, either.
“My prediction is we’ll see growth in the second quarter,” he said. “Not robust growth, maybe 1% or 1.5%, but I don’t think you’ll see GDP decline again.”
Meanwhile, Regan said econo- mists with AIM are projecting that recession is “more likely than not, but it won’t be a terribly long recession.”
For this issue, BusinessWest
The job market is strong,
BOB NAKOSTEEN
”
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FEATURE
MAY 30, 2022 11