Democracy Dies in Darkness

Opinion Recession warnings are growing. Almost no one is prepared.

By
Columnist|
October 20, 2022 at 6:24 p.m. EDT
Jamie Dimon, the chief executive of JPMorgan Chase, in Washington in 2019. (J. Lawler Duggan for The Washington Post)
4 min

Virtually no one seems ready for the dark clouds gathering over the domestic and global economies. Not most Americans, and certainly not the politicians who govern them.

Economic and business leaders have been sounding alarms recently about the rising risk of recession. An overview of the warnings:

  • Fitch Ratings said it “expects the U.S. economy to enter genuine recession territory” in the second quarter of 2023.
  • Economists surveyed by the Wall Street Journal believe there’s a roughly two-thirds chance of a recession in the United States in the next year.
  • The Conference Board’s latest gauge of CEO confidence was at its lowest level since 2009 (during the Great Recession), and 98 percent of surveyed CEOs anticipate a U.S. recession next year. Some particularly high-profile corporate leaders, such as JPMorgan Chase’s Jamie Dimon and Goldman Sachs’s David Solomon, have put their names to the prediction.
  • Various global entities have emphasized the risks to poorer countries. The International Monetary Fund cautioned that “the global economy is headed for stormy waters.” The World Bank said “the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that would do them lasting harm.”
  • While some metrics — such as U.S. job growth — suggest the economy is still okay, others show signs of distress. Home sales and mortgage demand are plummeting; investors are dumping junk-rated securities sold by housing-finance giants Fannie Mae and Freddie Mac over concerns about rising mortgage defaults. Global freight volumes and new U.S. manufacturing orders are falling, too.

President Biden said last week that he doesn’t anticipate a recession, a comment that drew some mockery. But saying he does expect a downturn at this point would be political malpractice; such a pessimistic presidential message might frighten the public so much that recession becomes a self-fulfilling prophecy.