Evelyn Reynolds

Fed Governor Lael Brainard and San Francisco Fed President Mary Daly spoke Tuesday, emphasizing the central bank’s commitment to fighting inflation through higher interest rates.
“It is of paramount importance to get inflation down,” Brainard said.
Raising rates “is what is necessary to ensure that again, [you] go to bed at night, you’re not worrying about whether prices will be higher, considerably higher tomorrow,” Daly added.

If there was any question about where the Federal Reserve stands on the key issue of the day — inflation — two important officials brought even more clarity on Tuesday.
Fed Governor Lael Brainard and San Francisco Fed President Mary Daly both issued comments that showed they envision higher rates and, in the former’s case, an aggressive drawdown of the assets the central bank is holding on its balance sheet.

Investors didn’t particularly like what they heard, sending major averages considerably lower on the day and the 10-year Treasury yield to a new 2022 high.

Lael Brainard, governor of the U.S. Federal Reserve, speaks during a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Thursday, Jan. 13, 2022.
Al Drago | Bloomberg | Getty Images

“It is of paramount importance to get inflation down,” Brainard said during a Minneapolis Fed webinar. The Federal Open Market Committee, which sets interest rates, “will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”
The comments helped knock down a positive opening on Wall Street that ultimately turned into a nearly 1% loss for the Dow Jones Industrial Average. The more aggressive Fed chatter also comes as the 30-year fixed mortgage rate topped 5%, a key threshold, which could slow the housing market.

‘We’re not going to let this go forever’

Later in the day, Daly said inflation running at a 40-year high “is as harmful as not having a job.” Speaking to the Native American Finance Officers Association, she assured the group that the Fed is on the case.
“Most Americans, most people, most businesses, hopefully people in tribal nations, you all have confidence that we’re not going to let this go forever,” Daly said. “But if you don’t have that confidence, let me give it to you.”

She assured those in attendance several times that interest rates are heading higher, though she added that she doesn’t think it will cause a recession.
Raising rates “is what is necessary to ensure that again, [you] go to bed at night, you’re not worrying about whether prices will be higher, considerably higher tomorrow,” Daly added.
The Fed already has enacted its first rate hike of the year, a 0.25 percentage point move in March. Markets expect increases at each of the six remaining meetings this year, possibly totaling 2.5 percentage points.

Two policy ‘doves’

What made the two officials’ comments more striking is that they are considered to be in the camp of Fed “doves” — meaning that they usually favor low rates and less restrictive policies. That they both see a rather urgent need to tighten underscores how seriously the Fed is taking the threat.
Brainard’s voice carries a little extra heft in that she has been nominated to be vice chair of the FOMC, a position that makes her the top lieutenant for Chairman Jerome Powell.

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Brainard said she expects the Fed’s $9 trillion balance sheet to “shrink considerably more rapidly” than was the case during the last rundown in 2017-19. In that episode, the Fed allowed $50 billion a month in proceeds from maturing bonds to roll off while reinvesting the rest. Her comments opened the door to what many economists expect to be a monthly roll-off around $80 billion to $100 billion.
Reducing the balance sheet “will contribute to monetary policy tightening over and above the expected increases in the policy rate,” Brainard added.
“Currently, inflation is much too high and is subject to upside risks. The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted,” she added.
Daly echoed the idea that the balance sheet reduction could start in May, adding that the Fed’s commitment to fighting inflation “will mean interest rates go up.”
“But inflation, what people are paying day in and day out is on the minds of everyone, they go to bed at night thinking about it wake up in the morning thinking about rent, transportation, gas prices, food prices, so we as a Federal Reserve are on a path to raise the interest rates,” she said.

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Philadelphia Fed President Patrick Harker on Wednesday warned about inflation and the interest rate hikes needed to control rising prices.
The cautionary tone comes the day after two of his colleagues, Governor Lael Brainard and San Francisco Fed President Mary Daly, also expressed concern over inflation.
Harker said he expects “a series of deliberate, methodical hikes as the year continues and the data evolve,” though he wasn’t quite as emphatic about the issue of balance sheet reductions.

NEW YORK, NEW YORK – SEPTEMBER 27: Philadelphia Federal Reserve President Patrick Harker visits “Mornings With Maria” at Fox Business Network Studios on September 27, 2019 in New York City. (Photo by John Lamparski/Getty Images)
John Lamparski | Getty Images Entertainment | Getty Images

Philadelphia Federal Reserve President Patrick Harker joined the chorus of central bankers warning about inflation and the interest rate hikes needed to control rising prices.
In remarks Wednesday, the policymaker said he is worried about an inflation rate running at its highest level in 40 years. He anticipates the Fed will respond by raising rates and reducing the level of bonds it is holding on its balance sheet.

“Inflation is running far too high, and I am acutely concerned about this,” Harker told the Delaware State Chamber of Commerce.
“The bottom line is that generous fiscal policies, supply chain disruptions and accommodative monetary policy have pushed inflation far higher than I — and my colleagues on the [Federal Open Market Committee] — are comfortable with,” he said. “I’m also worried that inflation expectations could become unmoored.”
The cautionary tone comes the day after two of his colleagues, Governor Lael Brainard and San Francisco Fed President Mary Daly, also expressed concern over inflation. Brainard, an influential policy “dove” who generally favors lower rates and less restrictive monetary policy, said reducing inflation is “of paramount importance” and would require “a series of interest rate hikes” and a “rapid” reduction of the balance sheet.
Stocks dropped and bond yields rose following the comments.
Harker’s comments closely resembled Brainard’s view on rate hikes.

He said he expects “a series of deliberate, methodical hikes as the year continues and the data evolve,” though he wasn’t quite as emphatic about the issue of balance sheet reductions.
Harker is a nonvoting FOMC member who nonetheless has input into the committee’s final decisions. On the broader economy, he sees growth as “robust” and anticipates inflation ultimately coming down to the Fed’s 2% goal.
At its March meeting, the FOMC approved its first rate increase in more than three years. Markets expect a succession of increases that ultimately could take short-term borrowing rates to 3% or above.
Wall Street will be watching Wednesday as minutes from that meeting are released at 2 p.m. ET. Following the meeting, Chair Jerome Powell said the summary will reflect discussions on the bond holdings, which have brought the balance sheet to about $9 trillion.

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Treasury Secretary Janet Yellen testifies Wednesday before the House Financial Services Committee on the state of international finance.

In remarks prepared for the hearing, Yellen in particular noted the impact that Russia’s attack on Ukraine will have on the global system.
“Russia’s actions, including the atrocities committed against innocent Ukrainians in Bucha, are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions for the world,” she said.
Yellen also noted that institutions such as the International Monetary Fund, the World Bank and others are stepping in to provide financial assistance to Ukraine.
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San Francisco Fed President Mary Daly compared high inflation with unemployment, saying that higher prices are “as harmful as not having a job.”
Daly said the Fed will use its tools to combat inflation. “If you don’t have that confidence, let me give it to you,” she said.

San Francisco Federal Reserve Bank chief of research Mary Daly stands near the podium before a speech at the CFA Society in San Francisco, California, U.S. July 10 2018.
Ann Saphir | Reuters

San Francisco Fed President Mary Daly is worried about inflation, telling an audience Tuesday that the high cost of living is causing a heavy burden on society.
“I understand that inflation is as harmful as not having a job,” she said, “that if you have a job and you can’t pay your bills, or I feel like I can’t save for what I need to do, then that’s keeping you up at night.”

“And our goal is to make sure that people don’t stay up worrying about whether their dollar today will be the same and worth a dollar tomorrow,” she said, during a session presented by the Native American Finance Officers Association.

Daly spoke as the Fed embarks on a policy tightening phase that will include higher interest rates and a reduction in the amount of bonds the central bank is holding. Fed officials hope that reversing the ultra-easy policies they put into place during the pandemic will help get inflation closer to their 2% longer-run goal.
The consumer price index, which measures a basket of dozens of common items, is running at a 7.9% rate over the past 12 months, the highest in more than 40 years.
While she didn’t specify how quickly she thinks the Fed will move, Daly said the efforts will have an impact.
“It will mean interest rates go up, making it harder to finance a car or a business,” she said.

“Most Americans, most people, most businesses, hopefully people in tribal nations, you all have confidence that we’re not going to let this go forever,” she added. “But if you don’t have that confidence, let me give it to you.”
Even with the higher rates, Daly said, she doesn’t see the economy entering recession, though she expects things to slow.
She said the economy “could teeter,” but “nothing that tips us into recession this year.”

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Fed Governor Lael Brainard said Tuesday the central bank could start reducing its balance sheet as soon as May and would be doing so at “a rapid pace.”
She also indicated that interest rate hikes could come at a more aggressive pace than the typical increments of 0.25 percentage point.
The Fed already has approved one interest rate increase: a 0.25% hike at the March meeting, the first in more than three years and likely one of many to occur this year.

Lael Brainard, Federal Reserve governor and President Bidens nominee to be the new vice-chair of the Federal Reserve, speaks during her nomination hearing with the Senate Banking Committee on Capitol Hill January 13, 2022 in Washington, DC.
Drew Angerer | Getty Images

Federal Reserve Governor Lael Brainard, who normally favors loose policy and low rates, said Tuesday the central bank needs to act quickly and aggressively to drive down inflation.
In a speech written for a Minneapolis Fed discussion, Brainard said policy tightening will include a speedy reduction in the balance sheet and a steady pace of interest rate increases. Her comments indicated that rate moves could be higher than the traditional increments of 0.25 percentage point.

“Currently, inflation is much too high and is subject to upside risks,” she said in prepared remarks. “The [Federal Open Market] Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”

The Fed already has approved one interest rate increase: a 0.25% hike at the March meeting, the first in more than three years and likely one of many to occur this year.
In addition, markets expect the Fed to lay out a plan at its May meeting for running down some of the nearly $9 trillion in assets, primarily Treasurys and mortgage-backed securities, on its balance sheet. According to Brainard’s Tuesday comments, that process will be swift.
“The [FOMC] will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” she said. “Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery, with significantly larger caps and a much shorter period to phase in the maximum caps compared with 2017-19.”
Back then, the Fed allowed $50 billion in proceeds to roll off each month from maturing bonds and reinvested the rest. Market expectations are that the pace could double this time around.
The moves are in response to inflation running at its fastest pace in 40 years, well above the Fed’s 2% target. Market expectations are for rate increases at each of the remaining six meetings this year, possibly totaling 2.5 percentage points overall.

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Wayne Orr didn’t yet know that his foot was broken as he made his way back from Texas to his home in South Carolina, but he did know that he couldn’t continue pressing the pedals on the tractor-trailer he had been driving.A new driver only a few months past his training period, he had to sit out for six weeks without pay. Then, when his foot finally healed, he discovered that his company, CRST Expedited, had fired him. Frustrated and needing a paycheck, he found a new job driving for Schneider International, but was once again stymied: CRST threatened to sue Schneider for hiring him, he said.“I called CRST and they told me that they would not take me back and that I had to pay them $6,500 or I could never drive for another company, either,” Mr. Orr, 59, said.He had signed a contract to work for CRST for 10 months in exchange for a two-week training course. If he didn’t last 10 months, the contract required him to pay the company $6,500 for that training.Each year, thousands of aspiring truck drivers sign up for training with some of the nation’s biggest freight haulers. But the training programs often fail to deliver the compensation and working conditions they promise. And drivers who quit early can be pursued by debt collectors and blacklisted by other companies in the industry, making it difficult for them to find a new job.At least 18 companies, employing tens of thousands of drivers, run programs aimed at qualifying trainees for a commercial driver’s license, or C.D.L. Typically, to get free training, the new hires must drive for the company for six months to about two years, usually starting at a reduced wage.The companies “sign them into this indentured servitude contract where they basically have to drive and be a profit source for the company,” said Michael Young, a lawyer in Utah representing a former trainee in a lawsuit against C.R. England, a privately held trucking company that employs about 4,800 drivers.With e-commerce leading Americans to expect quick delivery, trucking companies face pressure to haul more and do it faster. The American Trucking Associations, a trade association, has warned of a vast truck driver shortage. But researchers and drivers’ representatives maintain that the high turnover occurs because too many large companies fail to make their jobs attractive enough. The industry has been plagued with class-action lawsuits about working conditions and wages, leading to hundreds of millions of dollars in settlements.Nine in 10 drivers leave their jobs within a year at large carriers like CRST and C.R. England, according to the trucking trade group. The companies need a constant flow of new recruits to keep revenue up, and without locking them into a contract, they risk losing their newly trained drivers to competitors offering a higher wage.“We think paying for C.D.L. school is a great benefit we can offer but not one that we can afford to do if folks do not come work with our team or ultimately pay us back,” said TJ England, chief legal officer of C.R. England. “If people just want to go to a different company, that’s where we try to protect our investment.”On the Road With America’s Truck DriversThe Cost of Quitting: Thousands of aspiring truckers sign up for training each year. But if they quit early, they may be pursued by debt collectors.Trucker Shortages: The real reason there aren’t enough drivers? It is a job full of stress, physical deprivation and loneliness.Supply Chain Issues: A wave of trucker retirements combined with those quitting for less stressful jobs is exacerbating shipping delays.‘We’re Throwaway People’: Trucking is no longer the road to the middle class that it once was. In 2017, we asked drivers why they do it.CRST, an Iowa-based company, would not answer specific questions for this article but said in an emailed statement that its training program “has brought thousands of drivers into the industry who may not otherwise have been able to obtain a commercial driver’s license.” As for Mr. Orr’s account, a spokeswoman would say only that it omitted key facts.The New York Times and The Hechinger Report, a nonprofit news organization, interviewed more than 30 current and former truckers with direct knowledge of company training programs, including 15 who had gone through them. Almost all 15 left before their contracts were up, despite intending to stick it out. One was given only four days at home in the four months he drove for CRST, just a quarter of what he said was promised in his contract, according to a complaint filed with the Iowa attorney general’s office.Others described weeks of unpaid time spent waiting for trainers. Many said they were never told that they would sit for hours, unpaid, while they waited for their trucks to be loaded and unloaded, or even for days to get a new assignment. Many drivers said they were told by the companies that they would make more than they did. Since drivers are paid by the mile, the time spent waiting cut significantly into their paychecks.In job advertisements and in their pitches to recruits, companies promise earnings of up to $70,000 in the first year and even higher salaries in the future. But the median annual wage for all truck drivers, regardless of experience, was $47,000 in May 2020, according to the most recent data from the Bureau of Labor Statistics. Only the top 10 percent of earners were making above $69,500.Wayne Orr attended CRST’s training program in 2019. “That training program is like a money mill to them,” he said. Sean Rayford for The New York TimesStill, many are attracted to trucking despite its sometimes punishing demands, seeing it as a possible on-ramp to the middle class. New drivers can train at independent schools, which can be expensive, or community colleges, which may take more time. Company training programs are a popular option for those eager for a paycheck right away.Many large companies start classes weekly; keeping a constant flow of people is crucial. They deputize their drivers, offering referral bonuses for every new person brought on board, and employ recruiters to pursue anyone who has expressed interest. In a training manual filed as an exhibit to a lawsuit in 2021, CRST instructed recruiters: “Create urgency. Tell the applicant we have a ‘few’ spots open. Our school and orientation will fill up quickly.”At most company schools, trainees typically spend two to four weeks learning in a classroom and in parking lots. Many former trainees said that the instruction was insufficient and that they spent little time in trucks.Amy Jeschke attended C.R. England’s program in Indiana in 2019. She went out on the road only twice during her training, she said, and the rest of the time did maneuvers in a yard or memorized what to do on a pre-trip inspection.“Honestly, we weren’t doing anything for most of the time,” Ms. Jeschke, 46, said. “You’re lucky if you got in the truck once a day.”Joy Skamser, 44, who also attended C.R. England’s training program in 2019 and lives in Southern Illinois, said she felt unprepared to drive, despite earning her commercial driver’s license at the end of the training.“They do not teach you how to drive a truck, they just teach you how to pass the test, and that’s very dangerous,” she said.Mr. England said the company gave high-quality training to its students that includes time in the classroom, on the driving range and on the road, with skill assessments throughout. Students who fail the assessments are given additional practice, he said.Once they have earned the license, drivers haul actual loads for their new employers. For typically four to 12 weeks, they are accompanied by a trainer. They earn a set weekly rate, varying by company but often $500 to $800, according to company websites. Mr. England said his company’s pay was $560 a week in 2019 and about $784 today.Trainers may be barely trained themselves, often needing only six months’ experience, and they are allowed to sleep in the back while the new driver is alone in the cab, according to industry experts and many companies.Ms. Jeschke said she finished her training without being able to back up, a crucial skill for truckers. She said she once spent a week at a truck stop, unpaid, waiting for another driver because she didn’t yet have the expertise to pick up a load on her own.Frustrated with the working conditions and the low pay, she and Ms. Skamser left C.R. England before their contracts were up and went to work for another trucking company, Werner Enterprises, where they say they were more fully trained.“I do not have words for how bad it was,” Ms. Jeschke said. “They do not care about drivers, only the loads.”Ms. Skamser said a debt collection agency was pursuing her for $6,000 that C.R. England says she owes for her training.It’s reasonable for companies to want to recoup the cost of training an individual, said Stewart J. Schwab, a professor at Cornell Law School. Still, he noted, like noncompete clauses, these contracts can significantly restrict worker mobility and hinder competition. In 2021, Mr. Schwab worked on a proposed law about restrictive employment agreements, such as the ones trucking companies use, with the Uniform Law Commission, a nonpartisan organization that drafts laws for states.The proposed legislation calls for the repayment of the training cost to be prorated based on when an employee leaves and says it should not exceed the actual cost of the training.Many major trucking companies don’t prorate their charges, meaning a driver who leaves on Day 1 after training would owe the same amount as one let go the day before fulfilling the contract. And companies are generally not made to account for how much they spend on the actual training. In 2019, a judge found that CRST’s charging $6,500 for its training “when in fact the cost was thousands of dollars lower” was a “deceptive practice.”That finding came as part of a class-action lawsuit that Mr. Orr eventually joined. The suit, which contended that drivers were being overcharged for their training and paid less than minimum wage for their hours worked, was settled for $12.5 million in 2021.Companies can come after drivers for money — or send them to debt collection — regardless of the reasons they leave or are let go. They also can try to prevent drivers from taking other jobs, as CRST did with Mr. Orr, lawyers for the drivers say. Such actions effectively deny those who want to leave a company the opportunity to do so and pay off their debt.Drivers who leave trucking companies before their contracts are up can be pursued by those companies — or by debt collectors — to pay thousands for training.Sean Rayford for The New York TimesA lawsuit filed in 2017 on behalf of drivers contends that eight companies, including CRST and C.R. England, are conspiring to block drivers under contract from changing jobs. Some companies refuse to release drivers’ records to prospective employers or send letters threatening litigation to competitors who don’t abide by a no-poaching agreement, the complaint says.Mr. England described the allegations as meritless but acknowledged in an interview that his company had “sued or threatened to sue some of our competitors for unlawfully interfering with those contractual relationships.”He said his company’s competitors had “unfairly taken advantage” of the training C.R. England provides to its drivers.Worried about being blackballed wherever he went, Mr. Orr took out a loan — the lowest interest rate he could find was 14 percent — and paid CRST. Through the class-action lawsuit, he was reimbursed for about two-thirds of what he had paid.“That training program is like a money mill to them,” he said. “They pretty much sell you a lot of dreams.”This article was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. More

Surging inflation has Americans reconsidering how they spend their money.
The Consumer Price Index, which measures a wide-ranging basket of goods and services, jumped 7.9% in February from 12 months prior. Prices are going up on everything from the food you put on the table to the gas that powers your car.

That’s weighing heavily on people’s minds, with 48% thinking about rising prices all the time, according to a CNBC + Acorns Invest in You survey, conducted by Momentive. The online poll was conducted March 23-24 among a national sample of 3,953 adults.
Three-quarters are worried that higher prices will force them to rethink their financial choices in the coming months, the survey found.

Arrows pointing outwards

Inflation is costing the average U.S. household an additional $296 per month, according to a Moody’s Analytics analysis. Experts expect it to get worse before it gets better.
Still, there hasn’t been a significant impact on consumer spending, although retail sales grew at a slower pace than expected in February.
The biggest area people have cut back on is dining out, with 53% saying they’ve done so, according to the survey. They are also driving less and canceling monthly subscriptions, among other things.

Arrows pointing outwards

If higher prices persist, dining out, driving and trips or vacations are the top three areas Americans plan to cut back on even more.
To be sure, the past year has been difficult for many. Fully 52% said they are under more financial stress than a year ago. They are most concerned about gas prices, housing costs and food costs. In the last year, gas spiked 38%, shelter rose 4.7% and food prices increased 7.9%.
Meanwhile, a bulk of Americans are unhappy with the response from the White House, with 61% disapproving of the way President Joe Biden is handling inflation.

Recession fears

The current environment has a majority of Americans concerned about an economic recession, with 81% of respondents believing one is likely to happen this year.
“People are definitely on edge,” said Moody’s Analytics’ chief economist Mark Zandi. “Recession risks are high.”
He puts the odds at 1 in 3 and rising.

When will inflation slow?

Inflation was brought on by the pandemic, which scrambled supply chains and labor markets, and worsened by the Russian invasion of Ukraine, which impacted gas and food prices, Zandi explained.
“If that diagnosis is correct, as the pandemic fades and as we get the other side of the fallout of the Russian invasion, inflation should moderate,” he said.

Arrows pointing outwards

However, consumers will be in for some more pain in the near term, as inflation continues, Zandi said.
“We’ve got a couple of bad months dead ahead,” he said.
He predicts inflation will peak around May and by this time next year, it will be a lot lower, depending on how global events play out, as well as the response by the Federal Reserve. The central bank increased interest rates last month to combat inflation and plans another six hikes this year.
If the Fed doesn’t calibrate things just right, the economy can go into a recession, Zandi warned.

Navigating higher prices

Grace Cary | Moment | Getty Images

The first thing you should do is get a handle on your financial situation.
Asking yourself some key questions can help you figure out where you may be able to trim expenses, said certified financial planner Ashton Lawrence, a partner at Goldfinch Wealth Management in Greenville, South Carolina.
“What’s the cash flow look like? What type of debt, how much debt are we looking at?” he said.
“It’s about making the small changes and controlling where you can control.”
More from Invest in You:Most Americans are worried about a recession hitting this yearHere’s what consumers plan to cut back on if prices continue to surgeHere’s how retirees can navigate higher prices
Once you see where you are spending money, break it down into needs and wants, and begin to cut back on things that are optional, said CFP Carolyn McClanahan, founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.
In fact, eating out all the time not only costs more money than cooking at home, it’s also not as healthy, said McClanahan, who is also a medical doctor. When at the grocery store, use coupons and comparison shopping to help you save money.

There will be nights when time is tight and you are tempted to order takeout for dinner. McClanahan cooks in bulk on Sundays and puts meals in the freezer for those nights.
Carpooling or planning car trips to minimize driving can help with gas, as can working from home a few days a week, if feasible.
While it is natural to be concerned about rising prices, you can’t control them — and worrying about it isn’t good for your health, McClanahan said.
“Only think about the things that you can control,” she said.
“Making certain you are spending your money in a thoughtful fashion is the one thing you can do to help mitigate the outside world around you.”
TUNE IN: Watch Sharon Epperson all day on CNBC discussing recession fears, consumer spending and financial literacy in schools.
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Rate hikes, soaring energy prices and geopolitical risks have combined to stoke fears of a possible recession. Credit Suisse however, thinks that is an unlikely scenario.
Michael Nagle | Bloomberg | Getty Images

After two years of the coronavirus pandemic, a recession and a rapid recovery, Americans are worried that the economy may swiftly decline once again.
Some 81% of adults said they think the U.S. economy is likely to experience a recession in 2022, according to the CNBC + Acorns Invest in You survey, conducted by Momentive. The online survey of nearly 4,000 adults was conducted from March 23 to 24.  

Certain groups are anticipating a potential economic downturn more than others, the survey found. That includes Republicans, who are more likely to think there will be a recession than Democrats, as well as those who see themselves as financially worse off this year than they were last year.

Arrows pointing outwards

What a recession means
The National Bureau of Economic Research, the arbiter of calling recessions, defines one as “significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The last recorded recession took place in 2020, when the coronavirus pandemic spurred mass shutdowns and layoffs across the U.S.
Since, however, the U.S. economy has seen a stunning recovery. The labor market has added back millions of jobs and is nearing its pre-pandemic state. In addition, wages have gone up for many workers, including those in lower-paying jobs.
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Because of this, many economists aren’t too concerned that a recession is on the horizon.  
“If you look at the labor market data right now, you’d be hard pressed to find any indication of recession,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab. “Maybe a relative slowdown, but that’s from really hot to just hot.”
Risks on the horizon
Even though the labor recovery is still going strong, there are other forces impacting consumers.
Inflation, for example, has hit many Americans hard and could hinder the economic recovery. In February, the consumer price index surged 7.9% on the year, the highest since January 1982. Prices have gone up in many categories such as housing, food and energy.
“Inflation is the boogeyman when it comes to recoveries,” said Robert Frick, corporate economist at the Navy Federal Credit Union.
That’s because if prices continue to climb — as they’re projected to — people may begin to pull back on spending, which could lead businesses to halt hiring. The Federal Reserve is also poised to continue to raise interest rates, which will slow down the economy to curb inflation.

This is a blunt tool, however, according to Bunker. The central bank must be careful to cool the economy enough to bring prices back down without tipping the U.S. into another recession.
There’s also geopolitical uncertainty around the war in Ukraine, which has contributed to rising fuel prices and will likely continue to pressure the global economy. In addition, the yield curve between the 2-year and 10-year U.S. Treasury bonds recently inverted for the first time since 2019, a signal that has preceded recessions in the past.
Still, this isn’t a sure sign that a recession is on the horizon, said Frick.
“Of all the things you have to worry about, I don’t think that the yield curve inverting is one of them,” he said.
What to do now
While it may be too early for Americans to prepare for a recession, they could take steps now to better their financial situation regardless.
That includes boosting emergency and retirement savings, as well as trimming budgets to keep spending down amid inflation that’s likely to continue.
“It pays to take a step back and look at the positives and weigh the negatives against historical evidence,” Frick said. “If you do that with the odds of recession, they’re still relatively low, but risks are high, and uncertainty is high.”
TUNE IN: Watch Sharon Epperson all day on CNBC discussing recession fears, consumer spending and financial literacy in schools.
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