Is a recession coming? Local economist weighs in

Is a recession coming? Local economist weighs in
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GRAND RAPIDS, Mich. — As scores of economists warn of a looming recession, one in West Michigan forecasts the next major economic slowdown to hit by 2020, but says not everyone will feel it. A constraint on workers, a high price on goods and an economy low on cash are all signs of a slowing economy that could contribute to a recession, economist Paul Isely said. After the gross domestic product surpassed its potential in 2018, Isely and his team at Grand Valley State University predicted a recession would hit in late 2019 or early 2020. Historically, when this happens to the GDP, a slowdown follows. “Generally, not always, but generally, we end up with a recession in 18 to 24 months and that’s happened the vast majority of the time since WWII," Isely said. “So the real question is, how deep? And will it be in the first six months, the last six months, maybe a year from now?” In the past week, the Federal Reserve made two moves that back up Isely’s theory. It added over $50 billion in cash to to economy and lowered interest rates for the second time since July. “Lowering interest rates is a little bit like sugar candy," Isely said. "It gives you a pop but it doesn’t stay for a long period of time because once people get used to the lower interest rates, then it doesn’t add anything more.” According to Isely, a recession like the one he is predicting […]

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