The US economy faces a 70% chance of a recession in 2023, according to the Bloomberg December 2022 survey of economists. Inflation has impacted US households for the last two years. The decline in economic activity during the last quarter of 2022 indicates that inflation rates should decrease over time. However, the decrease in economic activity also leads to a decrease in employment, lower wages, and therefore a potential recession.
Though an economic downturn could alleviate the effects of inflation, the potential recession could also result in some cities taking over a decade to recover from its effects.
2023 Economic Projections
Increasing interest rates and high inflation have the US economy facing a potential recession in 2023. More and more businesses are choosing to decrease their employment rates, inventories, and construction projects to prepare for the worst.
Businesses are expected to pull back on private investments, including any expenses related to equipment and construction during the first three quarters of 2023. This is a result of the decline in household finances. Additionally, the manufacturing sector is also expected to experience a 0.7% decrease in industrial production during 2023.
Employment rates are expected to decline during the second and third quarters of 2023 and by the first quarter of 2024, the unemployment rate is projected to peak at 4.9%.
Which US Cities Will Be Hit Hardest By the Recession?
Given the size and population of the United States, in the event of a recession, although most local economies will experience the effects of the economic downturn, not every city would be affected in the same way.
Since the impact on the different industries correlate to how the recession will affect the different areas in the US, it’s difficult to predict which exact areas would be most impacted in the event of a recession. However, based on historic data, it can be predicted that the states in the Midwest, southeast, and west would be the areas to experience a greater impact from the recession.
According to Forbes, the top ten US cities that could potentially be impacted by a recession in 2023 include:
1. Riverside, CA
2. Phoenix, AZ
3. Miami, FL
4. San Diego, CA
5. Providence, RI
6. Tampa, FL
7. Las Vegas, NV
8. Los Angeles, CA
9. San Antonio, TX
10. Orlando, FL
There are several cities, many of which are in Florida and California, which are at risk if there were to be a recession in 2023. Cities such as San Diego, Las Vegas, and Tampa have experienced an increase in the cost of housing between 17-28% from 2020 to 2022. During the pandemic, several people from Los Angeles and San Francisco flocked to Riverside, California, causing the housing market to skyrocket in the area and landing this city as the most vulnerable area during a recession.
Conclusion
Several economists are predicting a recession in 2023 and although this is only a prediction and has the potential to be in accurate, businesses, policymakers, and individuals within the forecasted vulnerable states should prepare themselves for any eventuality.
If you are already filling the pinch of the recession and you need to file bankruptcy please schedule an appointment with us here at Hishaw Law LLC. We are experienced in handling Chapter 7 and Chapter 13 matters. Please complete the online bankruptcy form prior to your consultation. Please reachout to us at 1.307.228.0407 to schedule a consultation.
