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Economist talks about Pennsylvania’s economy in 2023

  • Scott LaMar
A hand holding out cash money.

 CSA-Archive / Getty Images

A hand holding out cash money.

Airdate: December 21, 2022

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Inflation has been running at 40-year highs for the past few months led by the prices on energy and food. The U.S. Federal Reserve has responded by raising interest rates to slow down the economy. At the same time, the nation is adding hundreds of thousands of jobs every month and consumers have money to spend.

Those are just a few of the factors that are contributing to unique economic circumstances and have economists talking about a recession or maybe not.

On The Spark Wednesday, Gus Faucher, senior vice president and chief economist of The PNC Financial Services Group said he expects a mild recession,”Employment is lagging that we see the economy start to turn down first and then we see employment start to fall after that. But we are seeing some indications of softening in the labor market. So, for example, with much higher mortgage rates, we’ve seen housing starts decline. Employment in residential construction has been roughly flat over the past six months. But I think we’re likely to start seeing job losses there. I think we’re likely to start seeing job losses in some manufacturing industries as higher interest rates weigh on consumer purchases of big ticket items like cars and appliances or in business investment, in equipment, machinery, those types of things. So we haven’t seen that yet in the labor market. If we don’t get a recession, the big reason why is because the labor market is going to hold up. But I think with with interest rates much higher than they were even at the beginning of 2022 and set to move higher into 2023. I think the most likely outcome for the economy next year is what would hopefully be a mild recession.”

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