Who's afraid of recession?
Not the Los Angeles Times, apparently
At a rate of 8.6%, inflation in the United States is at a 40-year high.
As the cost of everything from fuel to groceries has jumped exponentially in the past several months and goods are in short supply, it’s not far-fetched to suspect a debilitating recession is just over the horizon.
But try telling this to the Los Angeles Times, which assured readers this week the recession would probably be no big deal.
“Yes, a recession looks inevitable," reads the headline of a story dated June 22. "But it may not be that bad. Here’s why."
The story explains: “Whether it’s President Biden insisting a recession is avoidable or his critics arguing that the wolf is at the door, both sides are acting as if the nation faces an unprecedented catastrophe.”
Well, yes. High inflation and scarcity will do that.
“Behind the rhetoric,” the story continued, “the reality is that recessions are a normal part of American economic life. The U.S. has had one, on average, every 6 1/2 years since 1945.”
Don’t worry about that 40-year high! This sort of thing is normal.
“Many households are flush with cash, and jobs are plentiful with demand for new workers strong,” the LA Times report argued. “Banks are well capitalized, which gives them a solid buffer against a business contraction. The rebound since [the pandemic] has been fast and strong, largely because of unprecedented government aid to households and businesses."
It continued, addressing the pandemic savings that will supposedly bolster the hard-pressed: “Those extra savings, along with historically low household debt and loan-servicing burden — many homeowners locked in low mortgage rates before the recent increases — suggest that most people are better positioned financially and could help make the next recession milder.”
Speaking of pandemic savings, that “money is rapidly evaporating for 26 million low-income families,” noted Bloomberg’s Saleha Mohsin.
This is to say nothing of what we’d need to see from the unemployment rate, which currently rests at 3.6% (the U-6 unemployment rate, considered a broader measure of actual unemployment in the U.S., presently registers at 6.7%), to help get inflation back under control.
“We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,’" former National Economic Council Director Larry Summers told an audience recently in London.
Put simply, we’re going to need more unemployed people if we want to rein in inflation, according to Summers.
Anyway, for no reason at all, here’s an LA Times headline from 2008, back when a Republican president presided over a recession: “$4 gasoline? It’s news to Bush.” The story reported specifically, “During a White House news conference, Bush tried to put the best spin on months of bleak economic news.”
"Spin on months of bleak economic news," you say? Who would do such a thing!