House Republicans want big spending cuts and other concessions in exchange for letting the government borrow more money. Politics could also pose a risk, as members of Congress squabble over the federal government's debt limit. "I'm not an economist so I don't know what to think, but it doesn't feel great." The debt limit fight could create the economy's next hurdle "You start seeing banks start to fail, companies like Microsoft and Facebook laying people off," she said. That rattles Prince, even though her own job as a nuclear engineer seems secure. Even profitable companies like McDonalds and General Motors have been cutting white-collar jobs. Many other businesses are still hiring, but job growth in March was the slowest in more than two years. "I think there's going to be a negative impact on the construction industry, where we'll actually see for the first time in a while where jobs start to dry up."Ĭonstruction companies cut 9,000 jobs last month. "Some of the regional banks here in the Twin Cities that do a lot of construction, they're not lending at all right now," Kaeding said. Mike Kaeding, who builds and leases apartments in Minnesota, has noticed the sharp drop in loans. "You throw into the mix the ill effects of the banking crisis and it does suggest that growth through the remainder of this year and into next is going to be very much on the soft side." "The Federal Reserve is still raising interest rates," Zandi said. can avoid an outright recession this year, but he argues it won't be easy, especially after the collapse of Silicon Valley Bank and Signature Bank and the resulting drop in lending by other banks. People may not be spending aggressively, "but they are spending enough to keep the economy moving forward," he said. And right now the firewall is holding firm," said Mark Zandi, chief economist at Moody's Analytics. "The American consumer is the firewall between a recession and an economy that moves forward. Personal spending grew at an annual rate of 3.7% in the first quarter, with increased spending on both goods and services. Spending by consumers like Prince is the biggest driver of the U.S. So we've been frugal with our travels." Consumers are spending enough to keep the economy going Maybe we'll just do the free national park. "Do we want to pet the dolphins? That's a bit pricey. "We did have to be a bit selective about what we'll be doing on vacation," Prince said. Prince, who lives in Alexandria, is planning a vacation this summer with her mom and sister, but with airfares up nearly 18% this year, they're limiting themselves to places they can go by car. "Now it's like, 'Let's see what's in the refrigerator and cobble together a meal from things that I already have." "Once upon a time, I might have said, 'I'd like to have steak and potatoes for dinner,'" Prince said. Virginia resident Desiree Prince says she's more budget conscious now than she used to be, and making decisions about what she spends with an eye on the price tag. "We're seeing that go down in most of our markets around the world - slightly - but it's still going down."Įconomy Inflation eased in March but prices are still climbing too fast to get comfortable "Things like - did someone add fries to their order?" Kempczinski said. "Our base expectation is for a mild recession in the U.S.," McDonald's CEO Chris Kempczinski said this week.Īlthough the fast-food chain reported strong sales so far in 2023, customers are less likely to splurge after two years of rising food costs, he said in an earnings call with investors. The economy is projected to lose more steam in the months to come as rising prices and higher interest rates take a toll on families and businesses. Growth was weighed down by declining inventories and housing investment. economy is showing signs of stress as nervous shoppers watch their spending and anxious lenders keep a tight grip on credit.Ī report from the Commerce Department Thursday shows the nation's gross domestic product grew at an annual rate of just 1.1% in the first three months of the year, compared to a 2.6% pace in the previous quarter. to experience a mild recession and says customers have grown more reluctant to splurge on or supersize their orders.įrom banks to burger joints, the U.S. A customer waits to order food at a Miami McDonald's on July 26, 2022.
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