Economist: Expect an economic recession over the next 12 months

Mar. 9—Economist Dr. Anirban Basu predicts an economic recession is coming later this year or in early 2024.

Basu joined the Greater Susquehanna Valley Chamber of Commerce on Thursday for the 12th consecutive year to detail global, national, and regional economic performance trends that are impacting and will impact the Valley's business community in the year to come. The economic forecast was held online via Zoom.

"It's going to get worse before it gets better," said Basu, the chairman and CEO of Sage Policy Group Inc., a Baltimore-based economic and policy consultancy he founded in 2004. "The global economy is weakening, the national economy is weakening, borrowing costs are higher and excess inflation persists."

Basu serves the chief economist function for many organizations, including the Maryland Bankers Association and Associated Builders and Contractors. The Baltimore Business Journal named him one of the region's 20 most powerful business leaders in 2010. In 2022, he entered the Daily Record newspaper's Circle of Influence. He is the Distinguished Economist in Residence at Goucher College, where he teaches the History of Economic Thought. He holds four graduate degrees, including a J.D. and a Ph.D.

"Some segments stand to hold up better than others, including public construction, grocery stores and multi-family housing," said Basu. "At some point, the Federal Reserve will stop raising rates — that will represent a key inflection point for the economy."

Recessionary conditions will prevail at some point over the next 12 months, said Basu.

Jobs, unemployment rates

The most growth in the economy is in the job market with 517,000 jobs added in January. America records 10.8 million available unfilled jobs, he said.

"The data indicate that American employers want to hire even more people despite all the talk about recession and slow down of the economy," said Basu.

If the labor force participation rate were what it was in 1980, there would be 12.3 million more men and 7.5 million fewer women in the labor force (ages 16 and older). The participation for workers age 16 and older dropped by 1.4 percent (men dropped by 9.6 percent and women increased by 5.5 percent), said Basu.

Between February 2020 and December, America was up by 2.7 million jobs (or up by 1.8 percent). Pennsylvania is down by 56,000 jobs in that same time period, said Basu.

The unemployment rate in December was 3.4 percent in the metropolitan area that includes Pennsylvania. The U.S. is at 3.4 percent, said Basu.

In the Susquehanna Valley between February 2020 and December, the number of people with a job increased by 0.9 percent in Snyder County, decreased by 1.6 percent in Montour County, decreased by 2.4 percent in Northumberland County and 2.5 percent in Union County, said Basu.

Unemployment is at 2.7 percent in Montour County, 2.8 in Union County, 3.5 percent in Snyder County and 4.3 percent in Northumberland County, he said.

"We're not in a recession now," said Basu. "Job market, retail spending, is just too strong to suggest the economy is backtracking at this moment."

All-women panel

As part of the forecast, the chamber kicked off the event with an all-woman panel discussion.

Lauren Smith, a visiting assistant professor of management and life program director at Susquehanna University, said in-store retailing is back, but e-commerce will continue to grow. Physical stores are still expected to account for 72 percent of all U.S. retail sales by 2024 while e-commerce sales continue to grow.

"It's super important to have a very integrated approach even at a small business level for consumers," said Smith.

Customers are starting to demand sustainability in the businesses they use. Sixty-six percent of consumers would spend more money for a product if they came from a sustainable brand, and 81 percent of global consumers feel strongly that companies should help improve the environment, said Smith.

Smith also noted that customer experience still reigns. Inflation and staffing also remain top concerns, she said.

State Sen. Lynda Schlegel Culver, R-27, said the economic forecast is one of her favorite chamber events to attend.

"Not only is Dr. Basu smart and informative, but he's also very funny," said Culver. "He delivers economics in a way where you want to learn more but most importantly you think about and apply his message throughout the year to whatever you're doing."