(Bloomberg) -- Virginia Governor Glenn Youngkin said he is planning for a recession in 2023 that could start as early as the second quarter and could cost the state more than 25,000 jobs.
“We are planning for it to last the rest of the year,” Younkin said in an interview with Bloomberg New’s Washington Bureau. “We think it will be a modest recession, and we think that starting in 2024 the Fed will start going in the other direction and hopefully land this plane.”
Economists surveyed by Bloomberg News expect near zero economic growth for the full year with two negative quarters in the back half of the year, raising the unemployment rate to 4.8% by the fourth quarter compared with 3.5% at the end of last year.
Recession risk is on the rise as the Federal Reserve raises interest rates to combat inflation that rose to 40-year highs last year. Fed officials in December signaled they plan to raise their benchmark policy rate above 5% this year and hold it their for all of 2023.
“I don’t think the Fed had any choice,” said Youngkin, a Republican. “What the Biden White House did with complicit senators and congressman was to drive inflation over the last two years” with fiscal spending.
Youngkin said the state added thousands of jobs last year and is “somewhat cushioned” in downturns by its employment mix, which includes government jobs and the defense industry. He said the state plans to invest through any downturn, which could be more mild than expected because of a moderate rise in unemployment.
“The countervailing influence here is jobs,” the governor said. “We have never had a pending recession like this where we haven’t seen a massive dislocation in the employment market.”
©2023 Bloomberg L.P.
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