Blake Loomer, Catherine Edwards, Edwards discussed on Skimm This

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Automatic TRANSCRIPT

Hi, everyone. It's Blake loomer win. Associate producer on skim this. We're doing things a little differently this week. First, I'll be taking the micro Alex for the next 5 minutes, and we're also focusing on one big chunk of headlines from the week. Everyone's favorite topic, the economy. We're going to start with this week's report on the country's gross domestic product. And remember, GDP is basically a measure of the overall size of the economy. To help us skim the report, we called Catherine Edwards, an economist at the Rand corporation, and a friend of the show. The U.S. economy shrank slightly in the second quarter for the months covering April to June. It had also shrunk in the previous quarter January to March, and this time around the second quarter, it was not as big of a contraction. Look, we know you've probably seen the word recession, plastered all over your news feeds. And that's because one general definition of a recession is two consecutive quarters of negative growth. So are we there yet? Well, Edwards says there's some nuance here because the various parts of the economy, which is made up of household spending, government spending, the investment of businesses and net exports don't move in the same direction all the time. Parts of the economy can grow, while other parts shrink. In terms of this GDP report, consumption still grew last quarter, but it grew at a slower rate than it normally does. Two thirds of our economy is household spending, and it grew this past quarter. That's a really good sign because it's about the largest part in the part that tends to reflect household well-being the most. What fell was one part of business investment that comes from inventory. And it fell a lot because businesses had stocked up at the end of last year, and so they've reduced how much they're buying right now because they have so much in their warehouse. And that's not typical in the U.S. economy businesses tend to keep their supply really tight. Jobs are another factor in the equation, and they're looking pretty okay right now. Unemployment is at a low of 3.6% and job openings are high. So that means we have a very strong labor market occurring as this contraction is happening. So this declaration of recession or nods can't just be about the one number, it has to be about the components they're in. I mean, we have some headwinds coming our way. Hopefully we can get around that. Basically, we're flirting with a recession. But according to Edwards, and other economists were probably not there yet. And we should note there's actually an official group of research economists from an organization called the national bureau for economic research, whose responsible for making the call on whether or not we're in a recession. And it can take months for the group to decide as more data on the economy is released. Whether or not they'll say we're in a recession remains to be seen. But one thing is clear. Parts of the economy are slowing down. And that should make the Federal Reserve happy, because it's been trying to rein in one part of the economic machine that's growing way too fast. Inflation, it's been doing that by raising interest rates. The latest hike came this week at another three quarters of a percent. The whole idea there, make it more expensive for people to borrow money, so they spend less, which keeps prices from shooting up. There's one other piece of the economic puzzle you're going to be hearing about. Corporate earnings. The latest reports are starting to roll out from some of the country's biggest companies. And already, it seems like a slowdown is in the works. But not across every industry. The drug company Pfizer beat Wall Street expectations in this last quarter. And Ford's profits were up too. But tech companies might not be looking so hot. Meta already reported its first ever yearly decline in revenue. And Google's parent company, alphabet, also reported a drop in profits. We're at a pivotal moment in which we're transitioning from coming out of the pandemic and all of its incredible economic consequences and moving back into a post pandemic economy that transition has not been always smooth or flawless or without issue, but the question is, can we pull it off without having to go through a recession first? So, did the economy shrink? Yes. Are there reasons to worry about it? Also, yes. But economists think it's too early to say, we're headed for a huge downturn, and Edwards left us with some tips if you're stressed about the economic outlook. Never judge your own economic security by the status of others. I think it's easy to feel intimidated or feel like you're doing something wrong because someone has saved more than you or your Friends graduated from college when you did, but now they have a house and that really erodes your sense of self. So don't let that enter your mindset. Make your decisions about you. If you're afraid you're going to lose your job, Polish your resume, get your LinkedIn profile up to date, just plan out what would you do if you lost it? Like, where would you go? Would you move in with somebody? Would you sell something? Start thinking about that stuff now so that if the worst does happen, you've thought about it. You don't want to be caught flat footed. Focus on

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