(WXYZ) — University of Michigan economics professor Don Grimes said many of his colleagues will say we're not in a recession, but he called the current economic times "recession-like."
He said we're not in a recession because too many jobs are being created, and the unemployment rate is low.
However, Grimes said the risk of entering a recession will increase towards the end of the year and the beginning of next year as a result of pandemic policies and behaviors.
"People's income has declined fairly sharply over the last couple years. People think they're in a recession or feel like they're in a recession. That may be more important than what most economists think," Grimes said.
"The government gave out an unprecedented amount of money in 2020 and 2021 to people. It helped people at that time. Also, people couldn't go shopping when things were closed down so people accumulated huge amounts of money," Grimes explained.
Now, he says that money has disappeared. There are no more stimulus checks, no more expanded unemployment benefits, and no more child tax credit.
"And on top of that decline in income, you've also got this huge increase in the inflation rate which means your real wage is declining and your real income, therefore, is declining," he explained.
Grimes said real disposable income per capita normally grows 2 to 3 percent per year. He said this year, real disposable income per capita will see the sharpest decline since 1932.
Detroit Regional Chamber of Commerce CEO Sandy Baruah tells me what's next is hard to forecast.
He said, "We went through literally almost a decade without any kind of real recessionary period. So, the old days where there was kind of a predictable cycle of x numbers of years of growth followed by a year or two of recession. Those days are out the window. If the pandemic has taught us anything is that it's really hard to predict."
So, what can be done to make things better? Grimes said the government can give out another round of stimulus checks or cut taxes.
He said both would increase disposable income. However, he said that consumer spending would continue to fuel demand and in turn keeps inflation from falling.
