Alabamians feeling the squeeze of inflation. Are we heading for a recession?
BIRMINGHAM, Ala. (WBRC) - We’re paying for more just about everything right now as inflation continues to skyrocket.
The average American household now paying nearly $500 more per month to buy the same good and services as this time last year, according to Moody’s Analytics.
The Consumer Price Index for June shows people are paying more for gas, food, rent and medical care including dental costs. Food prices are up 10.4% percent which are hitting small businesses hard.
“Every week we have to look at every invoice that we get in as a business to make sure that it hasn’t increased and sure enough it does increase every time we get inventory in,” Luis Toro, owner of Wasabi Juan’s in Birmingham said.
Toro is paying more for everything and having to pass it on to customers.
“There’s just no other way to go around it. You’re in business to try to make some money but with these increases, any kind of money or any kind of profit that you could try to make is non-existent,” Toro said.
Last month, the Federal Reserve raised interest rates by three-quarters of a percentage point. That’s the biggest increase since 1994. Economist Dr. Keivan Deravi, a retired professor of economics at AUM and someone the state has relied on for economic forecasts, says at this point, the Fed could raise interest rates even higher to combat inflation.
“If the inflation doesn’t yield which I think will yield or slow down, they are going to raise it by another one percent. So we’re talking about significant, aggressive interest rate hiking at this point in time,” Deravi said.
Are we headed for a recession? Deravi believes we’re technically in a recession right now because the U.S economy experienced negative growth in the first quarter and anticipated negative growth in the second quarter.
Deravi says we do have things working in our favor that may suggest a possible recession may not cut too deep.
“Will it be a really bad recession? There are 50/50 percent odds that it will not be a bad recession, it will be a shallow recession. We’ve got a lot of elements going for us. The job market is still good,” Deravi said.
Subscribe to our WBRC newsletter and receive the latest local news and weather straight to your email.
Copyright 2022 WBRC. All rights reserved.