During the Minnesota Chamber of Commerce’s 2023 Economic Summit on Thursday, Wells Fargo’s senior economist, Charlie Dougherty, said the U.S. economy’s fundamental parts, the businesses and consumers, have weathered the worst of inflation but that another economic specter looms.
Inflation has hit businesses and consumers hard, he said. Businesses are facing higher input costs and pricier wages for labor. Consumers are putting up more dollars for raising costs of goods and services. But inflation has gone from 9% to around 4%.
However, come the second or third quarter of 2024, consumers and businesses will need to weather another problem, according to Dougherty: an economic recession.
Doughtery said the recession is going to be mild, calling it a “tightening of the belt,” a “normal part of the economy,” and that the recession will be likely necessary for the inflation rate to reach 2%.
“Going from 9% to 4%, that was always going to be easy,” he said. “Going forward to where it needs to be, that’s the challenge. The last mile of the race is always the hardest, and that’s certainly true in the battle against inflation.”
