Eric K. Faulkner
Recession… it’s a nasty word. Many believe one key indicator of a recession is two consecutive quarters of negative Gross Domestic Product (GDP) growth. If that is true, the U.S. has been in a recession since the second quarter of this year, as we saw two straight quarters of negative growth to begin 2022. Recently, the 2022 preliminary third quarter GDP data was released reflecting growth of 2.6%. So, did we experience a one quarter recession? Are we in a recession right now? Why is the data so confusing?
The truth is, economists and media outlets can’t agree. While unemployment is near record lows, inflation continues to remain extremely high. The Federal Reserve has continued its strategy of reducing their balance sheet while aggressively hiking interest rates to combat and tame high inflation. As a result, home mortgage rates have skyrocketed to levels not seen since 2002. According to the Washington Post, the average rate for a 30-year fixed rate home mortgage is more than 7%. These high rates have begun to impact the housing market as demand for mortgages nationwide is slowing and home construction permits are down.
At CNB, we continue to watch the headlines and economic data. We know our business and agricultural customers are as well. Speaking of farming, crops are being harvested and challenges lie ahead for 2023 as input costs have increased. Even with all of the uncertainty, optimism remains high as we work with our clients on their plans for 2023 and beyond.
Want some additional insight and discussion? Reach out to your CNB contact. We are here to help you plan and prepare for anything you anticipate next year. Your success is our success, so let’s work proactively together!