WAITE PARK — Local economic experts still think a recession is likely this year, they told a group of business leaders and public officials Thursday, April 6.
The group gathered at GREAT Theatre in Waite Park to discuss St. Cloud’s economic outlook and the findings of the April 2023 St. Cloud Area Quarterly Business Report. The report surveys local business leaders every three months about their opinions on the local economy.
The report is produced by St. Cloud State University’s School of Public Affairs Research Institute and the Department of Economics at St. Cloud State University. Its most recent findings were also published in print in St. Cloud Focus and online at stcloudlive.com .
Economic indicators are somewhat mixed, as were the opinions of survey respondents, said King Banaian, one of the authors of the report. But the bottom line?
“The recession is coming. We still think it's coming,” Banaian said.
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In December, experts forecasted a recession in the next four to six months — but it hasn’t happened yet.
“We can be pretty sure to say that we don't think the recession has come quite yet, but we still see it coming in 2023,” Banaian said. He’s still comfortable with forecasting a rescission for April to June.
Of the leading economic indicators that Banaian tracks, including survey results, they’re evenly divided between a recession and expansion.
On the expansion side, stock prices are still up, new businesses are still incorporating and business leaders’ responses were generally positive on their current situation.
On the recession side, business leaders feel more negative about the future economy and initial claims for unemployment are up, Banaian said. Also, professional and business employment is down, which includes people working temporary jobs through an employment agency. Banaian said when businesses stop hiring these people, it could be a sign of an economic downturn.
Banaian said people should expect a more “garden variety,” normal recession this time around — not the kind of recession that followed the housing crisis in 2008.
What’s changed from his December outlook is the severity of the recession.
“I think the recession is … probably worse than I thought it was going to be in December,” Banaian said, because he didn’t see the recent banking crisis coming. That includes the collapse of Silicon Valley Bank among others.
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He also thought in December that the Federal Reserve would not drop interest rates in 2023, but he’s uncertain of that now.
“I have to say it's really possible that they'll do that. There's a fight going on,” Banaian said, “between the people saying no, we gotta fight inflation, that's first and foremost. And the others saying, hey, banks are really weak, we really need to do something about that.”
For more in-depth analysis, find the full QBR April 2023 report at stcloudlive.com/qbr.
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