The high inflation rate and low unemployment in the United States suggest that there will be a global recession. An economist says that Russia is a historical mistake and that China may cause further economic problems.
Various experts predict that the current global context could cause a recession in the coming two years. The decreasing commercial and industrial activity would create different economic problems like lower wages and higher prices. That could also affect the market of stocks and cryptocurrencies like Bitcoin (BTC).
Larry Summers and Alex Domash argue that a recession is likely when a high inflation rate and a low unemployment rate coexist. The economists say that the United States is currently undergoing that situation, which may impact the world as they have businesses on different continents.
They estimate a recession always occurs in the United States when inflation is above 5% and unemployment below 4%. Data from TradingEconomics indicates that inflation is at 8.5% and unemployment is just 3.9%, two all-time levels. That situation leads them to believe that the probability of a recession in two years is close to 70%.
Market analyst flix1 also predicted that there would be a recession in 2023 or 2024. An indicator nearing zero compares the US Treasury bond within ten to two years. Whenever it is negative, a recession occurs within the next 12 to 18 months, like in 1980, 1982, 1990, 2001, 2008, and 2020.
A Spanish Economist Estimates the US Recession Will Spread to Europe
Spanish economist Juan Ramón Rallo wonders whether the analysis of the United States applies to Europe. He considers this is one of the best moments for European labor markets but not at the level of the US. He also believes the economy has not rebounded in the old continent as much as in the North American country.
That leads him to think of doubts about whether European inflation is due to internal overheating or the importation of inflation caused by others. However, the Spanish specialist considers that the dilemma does not significantly modify the risks of recession in Europe and worldwide.
In addition, Rallo comments that the global economic landscape could become resistant to economic growth. That situation would arise if the United States entered a recession, added to the measures of China and the war in Ukraine.
Russia and China Are under Scrutiny for Fueling a Global Crisis
The recent measures by China against COVID-19 and the war between Russia and Ukraine raise the possibility of a global economic crisis. Those issues put the general supply chain and the market at stake, directly impacting the trade of products and services in those countries. For example, it affects the price of assets like Bitcoin, stocks, and commodities.
In that regard, market specialist Bill Blain considers that the lockdown strategies of China pose consequences and implications. These moving markets have the same force as the Russian invasion of Ukraine did in February. Blain said the closure of China would lead to having to rely on the West for all consumables, materials, and products.
In that context, the price of Bitcoin has remained relatively stable due to the buying and holding strength of traders. That leads some analysts to think that investors view the cryptocurrency as a hedge against inflation and a possible global economic crisis.
By Alexander Salazar
