Economists and analysts worldwide are talking about how the US is heading towards a recession. Some also think that we are already in one, and things will worsen before they get better. But Citigroup CEO warns that a recession in Europe is more likely than in the US, and even for the US, it will not be easy to avoid. This indirectly signifies that Europe will have a recession no matter what.
Recession in the United States and Europe
The CEO of Citigroup, Jane Fraser, recently shared her views on the global economy at the investor conference in NYC. Jane said there are 3Rs that are affecting the economy on a global scale. They are “rates, Russia, and recession.” So, coming to the point about why Europe has more chances of facing recession than the US, Jane shared something important.
Currently, the prices of electricity and energy are rising in Europe, and a lot of industries and companies are shutting down their operations. The impact on these companies is so huge that they are unable to handle the pressure of rising prices. With these rising rates comes economic tightening by raising interest rates which will slow down the economy by restricting credit. All in all, the economy will be in turmoil.
Jane Fraser also commented on Europe’s Central Bank (ECB), which is currently a few behind the US Fed in terms of inflation control. She then pointed out that the US is talking less about recession and more about interest rates. So, it is probable that they will not be able to avoid it either.
What does a recession mean?
A recession is a prolonged period of low economic activity that might last months or even years. When a country’s economy faces negative gross domestic product (GDP), growing unemployment, dropping retail sales, and contracting income and manufacturing metrics for a protracted period of time, experts call it a recession. Recessions are an inherent element of the business cycle, which is the regular cadence of expansion and recession in a country’s economy.
What are your thoughts as Citigroup’s CEO says recession in Europe is more likely than in the US? And do you agree with Elon Musk that we are already in a recession? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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