Although there has been significant debate over the past year regarding whether the United States economy was already in a recession or merely headed in that direction, the managing director of the International Monetary Fund advised this week that the situation could be worse than even the direct projections indicate.
In a CBS News interview on Sunday, Kristalina Georgieva warned of “a tough year, tougher than the year we leave behind.”
She based her urgent forecast on the fact that the U.S., the European Union, and China “are all slowing down simultaneously,” which could send as much as one-third of the world into a recession.
Even in nations that are able to escape a full-fledged economic downturn, Georgieva said that “it would feel like a recession for hundreds of millions of people.”
Global economic growth will likely take a major hit, she predicted, dropping from the 3.2% recorded last year “to 2.7%, maybe even lower” in 2023. Growth hit 6% in 2021.
Echoing the optimism of some in the Biden administration, Georgieva said that there is a chance that the U.S. will not enter a recession. At least half of the nations in the E.U., however, are all but destined to dip into one this year.
As for China’s economic downturn, she described 2022 as the first year in four decades that the nation’s growth “is likely to be at or below global growth,” noting that the increased spread of COVID-19 is likely to make things worse during the first half of 2023.
In an interview less than three months ago, Biden claimed that Americans have no reason to prepare for a recession.
In the past six U.S. recessions, an average of 26 states were experiencing negative growth on the eve of the national recession. What is the current state of economic growth among the 50 states? https://t.co/qX6xbAop7y pic.twitter.com/hbpSM6uf6H
— St. Louis Fed (@stlouisfed) December 29, 2022
“I don’t think there will be a recession,” he said. “If it is, it will be a slight recession — that is, we’ll move down slightly.”
Even when it comes to a minor downturn, he said that he does not “anticipate it.”
Many Republicans, however, used the traditional definition — two consecutive quarters of negative growth — to argue that the U.S. entered a recession months ago.
In July, after the country passed that inauspicious marker, Republican National Committee Chair Ronna McDaniel said: “Biden and Democrats are responsible for our shrinking economy, and they’re only trying to make it worse.”