Latest Economic Report Suggests Recession on the Way
America’s low unemployment rates had many believing that it was smooth sailing ahead for the economy. However, the most recent report from the Bureau of Economic Analysis showed that the American economy shrank during the first quarter of 2022 and a recession is likely on the horizon.
The amount of economic activity increased by $380 billion in just the first three months of 2022. With more economic activity, how did the economy shrink? The answer is inflation. Prices increased by 7.8 percent while the economy shrank by $70 billion or 1.4 percent.
This means the average American is facing higher prices. When examining the wages paid to workers compared to price increases, the Bureau found that real disposable personal income for Americans decreased by 2 percent. This means even as Americans take in higher paychecks, they are unable to purchase the same amount of goods and services.
With inflation at levels not seen in 40 years, it’s likely that the federal reserve will raise interest rates with the intention of lowering inflation. However, this will reduce economic activity and lead to a second quarter of economic decline, known as a recession.
Given these broader economic trends, Louisiana must do everything it can to address its own economic issues. Policies like occupational licensing reform can help remove unnecessary and arbitrary barriers to employment for countless Louisianans. With an unemployment rate above the national average, these reforms are necessary to turn this trend around in Louisiana.