June 23, 2022

KEEP ROCKIN’! The L.A. Times assures its readers: Yes, a recession looks inevitable. But will it be that bad?

Whether it’s President Biden insisting a recession is avoidable or his critics arguing that the wolf is at the door, both sides are acting as if the nation faces an unprecedented catastrophe.

Partly it’s political theater — Biden fighting on behalf of an already beleaguered presidency and many of the doomsayers hoping a downturn could be the coup de grace for Democrats.

Behind the rhetoric, the reality is that recessions are a normal part of American economic life. The U.S. has had one, on average, every 6½ years since 1945.

And in the present case, most professional economists think any downturn now is likely to be relatively mild, with a fairly quick recovery.

“We’re calling for a small ‘r’ recession,” said Jack Ablin, chief investment officer at Cresset Capital. “It means it’s not going to be protracted and things aren’t going to fall apart,” as they did during the Great Recession and again in 2020 when the pandemic struck.

Many households are flush with cash, and jobs are plentiful with demand for new workers strong. Banks are well capitalized, which gives them a solid buffer against a business contraction.

The L.A. Times is dismissing how painful a recession — combined with supply chain woes, out-of-control fuel prices and inflation in general — will be for millions of Americans — in much the same way they dubbed unemployment during the administration led by Biden’s former boss as “funemployment:” “For the ‘funemployed,’ unemployment is welcome!” — after all, it’s a chance to “Keep rockin’”!

 

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