Q3 2022 Economic outlook: Recession ahead?

Chief U.S. Economist Lara Rhame tackles the big recession question + her quarterly outlook.

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July 29, 2022 | 20 minute read

About this episode
With the Q2 GDP report hot off the press, revealing the second consecutive negative number, Chief U.S. Economist Lara Rhame shares why she believes the U.S. is not in a recession…yet. Plus, she breaks down both her near-term and longer-term outlooks, from jobs and housing to inflation and the impacts of disjointed global central bank policies.

To access the full macroeconomic outlook, visit: https://fsinvestments.com/fs-insights/q3-2022-economic-outlook/.

Transcript excerpt:

[00:00:00] Kara O’Halloran:
I have to ask the question just flat out. Are we in a recession?

[00:00:04] Lara Rhame:
Well, my answer is no. Not yet.

[00:00:15] Kara O’Halloran:
Welcome back to FireSide, a podcast from FS Investments. My name is Kara O’ Halloran, and I’m a Director on the Investment Research team. Here it is, Thursday, July 28th. It is only a few hours after the GDP reading shows that the economy contracted in the second quarter, which marks the second consecutive negative GDP print.

[00:00:34] Kara O’Halloran:
So on today’s episode, we are answering the question everyone’s asking. Are we in a recession plus what we’ll be closely watching in the third quarter, as we continue to assess the path of global economic growth, and whether or not this recent data will change the Fed’s hiking campaign. So to talk through all of this, I am excited to welcome the one and only Lara Rhame, our Chief U.S. Economist. Lara, thanks for joining.

[00:00:57] Lara Rhame:
Quite a list you had there, Kara.

[00:00:58] Kara O’Halloran:
I know we got a lot to cover, and I know it’s a very, very busy day for you. You’re a very popular lady. I appreciate you making the time for us.

[00:01:06] Lara Rhame:

[00:01:07] Kara O’Halloran:
Alright, so let’s get right into it. As I said, we got that negative, that second consecutive negative GDP print today. I have to ask the question just flat out. Are we in a recession?

[00:01:19] Lara Rhame:
Well, my answer is no, not yet, but to some degree, I almost don’t know that it matters because the second quarter GDP report was really reflected in the economy. That’s slowing down quickly. The Fed is raising rates aggressively and that was clear in the data. And when you break down that number, the headline fell 0.9%. We still had household consumption that was really up because consumers are aggressively spending on services, but durable goods purchases were down, that’s gonna be your interest rate sensitive sectors. Business investment was weak. Government spending fell. So the details really reflect Fed rate hikes having impact and the economy slowing.

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Kara O’Halloran, CFA

Director, Investment Research

Lara Rhame

Chief U.S. Economist + Managing Director

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