There was already a crash in US gross domestic product. According to a survey applied in many North American countries, concerns about inflation keep increasing in the nation.
According to the economic analyst and founder of Euro Pacific Capital, Peter Schiff, a recession in the United States of America is happening. It will be worse than the one that affected the North American nation in 2008.
A world crisis like the one mentioned got highlighted before since the consequences of a financial bubble could burst sooner than people expect.
The gross domestic product of the United States of America crashed by 1.4% in the first quarter of 2022, after four consecutive quarters of increase rate in 2021, according to the economic forecasts for the US from The Conference Board.
In an interview with NTD News, Schiff expressed that the economy already presented a concerning behavior in the first quarter of this year. A recession like the one he mentions gets usually determined by the gross domestic product crumbling down for two consecutive quarters, so the United States of America is at risk of experiencing a challenging recessive period.
Among the reasons, Schiff describes the features of this recession as worse than in 2008 due to the current inflationary scenario in which the country develops its economy, inflation that did not exist 14 years ago. Likewise, the expert highlights that the administration did not see that recession.
Economic Recession/ Higher Public Debt
Schiff also expressed that they thought banks were in optimal conditions before that financial crisis. He said Banks is only in good shape until the value of their loan collateral collapses and people can’t repay their loans.
The specialist affirmed that there is a way to solve this problem, but it does not come without a cost. Unfortunately, the middle class and the poor people will suffer these consequences the most because the Fed’s increased interest rates obstruct credit and access to channels that could alleviate people’s finances.
If the Fed doesn’t fight inflation to avoid a recession for the middle class and the poor, these sections of the population will suffer even more from massive inflation. Countries like the UK are experiencing the first beat of these consequences, primarily in food prices.
Deep Inflation concerns
According to a Statista report revealed on Monday at the World Economic Forum (WEF) in Davos, Switzerland, fears, and uncertainty over increasing inflation rates are causing more concern worldwide.
From the survey data in the United Kingdom, 52% of citizens consider inflation as one of the most significant struggles of the country in 2021-2022, while in a similar survey last year, the percentage was 35%. The 9% increase in inflation compared to the previous year is the highest increase in the previous 40 years in that nation.
In other European regions, citizen concern has also reached high levels compared to a year ago. The rates increased from 33% to 44% in Germany, 41% to 51% in Spain, and 29% to 37% in Italy.
By: Jenson Nuñez
