Economic Downturn?
The Federal Reserve’s Open Market Committee announced last week that it would raise the Fed’s baseline interest rate by 0.75 percentage points, the largest such increase since 1994.
The Fed’s move came in the wake of the Labor Department’s earlier announcement that the consumer price index (a measure of inflation) rose by 1 percent last month, and by 8.6 percent for the past 12 months, the highest rate of inflation since 1981. Following the release of the inflation figures, all the major domestic stock indices plummeted.
As a result of the foregoing, combined with the geopolitical uncertainty arising from the war in Ukraine, the continued supply chain issues (exacerbated by China’s ongoing difficulty with Covid), and other related factors, many economists and business owners are anticipating a recession.[i]
Whistleblowing Activity
If a recession does materialize, we will experience a significant decline in economic activity across most of the economy that will continue for several months; Economics 101, right?
In theory, one outcome of a recession will be a reduction in consumer confidence, which will be accompanied by decreased consumer spending. The drop in consumer demand, in turn, may reduce a business’s need for labor and materials, which leads to a reduction in business-to-business spending, more unemployment, etc. You get the picture.
Another impact of this “domino effect” may be the tightening of credit as lenders become more cautious about...
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