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Are we headed for a recession?

Top Alabama economist talks recession fears
Published: May. 12, 2022 at 10:48 PM CDT
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BIRMINGHAM, Ala. (WBRC) -As the Fed tries to get a handle on inflation, some major banks are predicting we could be in for another recession. Goldman Sachs puts the odds around 35% over the next two years. We took the recession question to a top economist in our state to see what he thinks.

Dr. Keivan Deravi says all the elements are there for a potential recession, but there are a few silver linings that may prevent it from happening.

With inflation rising along with gas prices and interest rates going up among other facts, Dr. Deravi puts our odds of a recession at 25% over the next year or so, which he says is in a normal range. Deravi is a retired professor of economics at AUM and someone the state has relied on for economic forecasts.

Deravi tells us there is too much money in the system right now. He says consumers continue to spend which is a good thing and could help with recession fears. A lot of you have money in your savings accounts though and that could help.

“The saving rate before the pandemic was close to maybe one or two percent. Right now it’s about 7.5%. That’s an enormous amount of liquidity out there so I think you have a lot of cushion in the system that would prevent it,” Dr. Deravi said.

But Deravi says the dark horse in all of this could be how all the markets react to the action of the federal reserve. Deravi says even though things may look at little shaky, it doesn’t mean a recession is right around the corner.

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