Are we in a recession? Who cares! What matters is what’s happening to your monthly budget. You are being affected by rising prices for just about everything, and you’re probably wondering if and when those prices are going to come down. Financial experts don’t necessarily agree on an answer.
“I don’t really care if the president or some senator from Florida disagree about whether we’re in a recession,” said Kristen Ahlenius, director of education at Your Money Line, on the Pete the Planner radio show. “I care about how it feels to you and I definitely think there are households who think that this feels worse than just the word ‘recession’.”
Ahlenius believes we are in a recession, and that for some people it feels worse than for others because on top of rising prices and interest rates, they may now face the prospect of unemployment.
Pete Dunn, a.k.a. “Pete the Planner”, said he believes the recession will be rather short-lived, perhaps ending at the end of this year or the beginning on next year.
No matter when it may end, your budget is affected by both what you pay at he grocery store, hardware store or gas station, and the sooner prices come down the less the pressure. But, that may not happen easily.
“They could just increase again the size of the packaging and keep the prices where they are and say you’re getting more for your money and keep that price level for themselves. Maybe they do drag the price back. I’m not sure how they’re going to approach this,” said Damian Dunn, also a writer for Your Money Line.
You’ve probably noticed that even if prices have stayed the same on some products, you’re getting less in the package.
Dunn said he’s not sure that you’ll see price regression, nearly as quickly as you’ve seen prices go up.
“I genuinely think, and this may be cynical of myself, that companies will hold on to their profits as long as they possibly can before they start to feel the pressure to decrease their prices back to a pre-pandemic level,” he said.
Pete Dunn said he believes the interest rates you’re seeing now that they’ve been raised are actually close to what they should be.
“The new normal threw us off as to what was normal,” he said.
He said because rates have gone up, you’ll see the recession end soon.
“Because of how our behavior and expectations have changed, the fact that interest rates are elevated off that artificial low, will contribute to the recession ending sooner rather than later because people are going to change spending.”
It’s very likely that you already have made sacrifices and will continue. Whether those sacrifices result in companies feeling pressure to back off high prices soon, is the human factor, sometimes unquantifiable.