What is a recession? A financial economics expert weighs in

NEW ORLEANS (WVUE) - Gasoline prices are falling and unemployment is low across the United States, but there is still a lot of recession talk.

“Unemployment’s still low, but recession has started,” said Nazar Mustapha, an Assistant Professor of Financial Economics at Dillard University.

“Recession is that decline in economic activity. It’s a fall in GDP (gross domestic product, the total value of goods and services produced by a nation) in two successive quarters. For example, in the first quarter of this year the decline of real GDP was 1.6 percent and the second quarter that ended in June the decline was .9 percent. Thus, we have a decline in real GDP in two successive quarters.”

Inflation is a big part of the picture, and it is has reached a 40-year high. People like Dickson Hopton-Jones say it is straining their budgets.

“I think it’s all getting a little ridiculous right now, I just wish it would come down a little bit so we could all save some more money,” he said.

Still, others like the falling gas prices.

“I’m happy they’re going down, but not far enough. Not the way they used to be,” said Mike Dauzat.

According to AAA, the national average for gasoline has fallen to $4.21 a gallon for regular unleaded, which is down 14 cents since last week. In Louisiana, the average cost per gallon is $3.82.

And the unemployment rate in Louisiana is down to 3.8 percent, slightly higher than the nation’s jobless rate of 3.6 percent.

Earlier in the COVID-19 pandemic, interest rates were lower and the federal government handed out stimulus checks to Americans, which put lots of money into the economy.

“At that time, interest rates were low, so people were buying more cars, more houses, corporations were undertaking more projects, so economic activity picked up,” Mustapha said. “But now, because of high inflation, the Fed (Federal Reserve) has to intervene in order to lower inflation, to slow inflation.”

And now there is the prospect of unemployment rising.

“A recession affects unemployment,” Mustapha said. “So, everybody should be concerned.”

Many residents say it is already hard to keep up with escalating prices.

“Just going to the grocery, what used to be a $50 trip is now a hundred and something bucks,” Dauzat said. “I hear it all day long. Not happy about it.”

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