Even as White House attempts to release the pressure of inflation and the threat of a recession, at least one analyst believes the road to economic recovery will be long.
David Spika, chief investment officer at GuideStone Financial Resources, told Baptist Press that he believes the nation is headed for a recession. He was the guest of “Baptist Press This Week,” released Aug. 25.
“I think one thing that people need to keep in mind is recessions are generally thought of as very difficult periods of time. People lose their jobs, stocks decline, etc., but recessions are a normal and healthy part of the economic cycle,” Spika said.
He said the national economy usually experiences some form of a recession every five to seven years, but there hasn’t been one since 2008. “So we haven’t had one in 14 years,” he said, “that means we’re overdue.”
In addition to looking at inflation, Spika said people should consider what he calls the Consumer Stress Indicator. It combines looking at the key items in consumer spending — mortgage rates, gas price and food prices.
“When you aggregate those, they come up with a measure. The measure today is 23,” he said. “This is the highest it has been since the early 1980s.”
This means consumers are really stressed by the environment and don’t have the cash needed to meet all of their needs.
He said while the dip in fuel prices is encouraging, it will probably be next March before there is a significant decline in inflation. That means consumers will still feel the pinch for several months to come.
“I think it’s a good time to practice some financial prudence,” Spika said, adding that he encourages consumers to be cautious when spending money on big ticket items.
People should be asking, “Do I need that new flat-screen TV? Do I need that new car?” before spending money on things that may not be necessary, he said.
Though the outlook might be bleak in the short term, Spika believes that the current financial cycle is healthy and needed for future growth.
“Recessions can be very healthy, just like you prune the shrubs in your yard for new growth, the economy needs to be pruned so it can experience new growth,” he said.
Spike believes as long as the recession is a minor one it will “put us in much better shape for the future.”
EDITOR’S NOTE — This story was originally written and published by Baptist Press, news service of the Southern Baptist Convention.
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