Several large U.S. banks have recently cut their forecasts for US GDP growth. Wells Fargo recently cut its growth expectations for 2022 and 2023 to just 1.5% and 0.5%, respectively. In a report announcing its new economic outlook, the bank said it expected year-end GDP growth to come in at 1.5% and 0.5%, respectively.
While recessions can be scary, they don’t last forever. The Great Depression ended eventually, with the strongest economic growth in U.S. history. The Atlanta Fed’s GDPNow estimate of real GDP growth fell from 2.4% to 1.8% last week. The market reacted negatively to the news, sending stocks down 3.1% on Wednesday. But there are signs of a slowing economy that are good for investors.
Many economists fear a repeat of the Great Recession, which lasted from July 1990 to March 1991. While the oil prices spiked during the First Gulf War, it is hard to know how long a recession will last. In 2020, the Coronavirus, or Covid, is expected to hit the U.S. economy and shut it down for months, wiping out millions of jobs. The NBER has officially declared a U.S. recession due to this virus.
Recessions also affect business owners. Many people find it difficult to get jobs and others struggle to stay in their jobs. Even those who manage to stay in their jobs may face pay cuts and even difficulties negotiating future pay increases. In a recession, investments can lose money, which can deplete savings and mess up retirement plans. Meanwhile, losing your job can result in the loss of property and other assets.