A 'rolling recession' or a 'richcession' might spare the US economy from a full-scale downturn

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Despite more than a year of widespread warnings that a recession was near, America’s economy is, if anything, accelerating

in the April-June quarter, an unexpected pickup from the 2% pace in the first quarter. Businesses helped drive the growth, with robust investment in equipment, software and buildings.in which growth slows and inflation falls without igniting a full-blown recession.Some say the economy is experiencing a “rolling recession,” a circumstance in which only some industries shrink while the overall economy manages to stay above water.

The housing industry was the first to suffer a tailspin after the Fed began sending interest rates sharply higher 16 months ago. As mortgage rates nearly doubled, home sales plunged. They're now. Manufacturing soon followed. And while it hasn't fared as badly as housing, factory production is down from a year earlier.

If the U.S. economy achieves a soft landing, Guha said, “we think these rolling sectoral recessions will be a big part of the story.”Affluent Americans aren’t exactly suffering, particularly as the stock market has rallied this year. Yet it’s also true that the bulk of high-profile job losses that began last year have been concentrated in higher-paying professions.

Many of the affected employees are well-educated and likely to find new jobs relatively quickly, economists say, helping keep unemployment down despite the layoffs. Right now, for example, the federal government, as well as employers in the hotel, retail and even railroad industriesTom Barkin, president of the Federal Reserve Bank of Richmond, notes that affluent workers typically have savings they can draw upon after losing a job, enabling them to keep spending and fueling the economy.

 

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