LOUISVILLE, Kentucky – We’ve all been paying more for our gas pump and grocery bills lately. Many economists say these prices will not come down any time soon.
To explain the latest economic trends in an easy-to-understand way, we spoke to a Louisville-based professor and economics expert.
what you need to know
- dr Jose Fernandez, associate professor and chair of economics at the University of Louisville, shares his thoughts on economic trends
- It describes current trends in the economy that are likely to indicate a recession
- dr Fernandez recommends young people buy into the stock market
- People ready to retire should shift assets into bonds and cash and out of stocks
The Dow plunged nearly 486 points last week and analysts at the New York Stock Exchange are calling this the lowest move for the Dow of 2022.
dr Jose Fernandez, associate professor and chair of economics at the University of Louisville, spent 15 years at UofL as a subject matter expert.
Tightening supply, inflation and the stock market are all words you’ve been hearing for months, but you may be wondering what you can do to prepare for a recession. dr Fernandez says there are things people of all ages can do when the economy is pointing towards a recession.
“If you’re young, this could be a good time to buy stocks. Shares could be offered for sale. You still have 20, 30 years of work ahead of you,” said Dr. Fernandez.
The reason the younger generations shouldn’t worry too much, Fernandez said, is that they’re a long way from retirement. Instead, they should buy into the stock market with low-risk stocks.
For people retiring, there are greater concerns about the current state of the economy. This category of people needs to be better with their money.
“If you’re close to retirement, yes, there are concerns. Maybe you want to move more things into bonds, cash and out of those stocks and more variable assets,” said Dr. Fernandez.
People retiring should prepare for market downturns that portend a recession and be aware of the state of the economy to avoid hurting their retirement prospects. But the expert says housing is a key concern.
“Anyone who bought a house in the last five years will have no incentive to sell their house. Who sells a house when they’re paying 3%, now they’re paying 6% on the new purchase they get? So that will reduce the housing supply,” explained Fernandez.
As a result, housing supply fell significantly as foreclosures halted and recent purchases increased during the peak of the pandemic. This also increased the rent. Up to this point, says Dr. Fernandez, most people have felt a change in their daily lives.
“If you’re someone who gets up and does your 8-5 every day or is early or mid-career, you don’t feel it yet. You don’t see it yet. The only place you feel that is in your grocery store when you see this higher inflation,” said Dr. Fernandez.
The only way to bring down inflation is if shoppers don’t chase fewer goods in stores, Fernandez said. The people who feel the trends of an economy headed for recession are people with risky assets; Things like real estate, high yield bonds and currencies.
He adds that these factors may feel like we’re in a recession; we are not – but the patterns of the current economy point in that direction. The biggest sign of a recession is drastic changes in unemployment, which the US has not yet seen.
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