The Federal Government cut rates by half a percentage point in September. This decision combats the inflation caused by Covid, where inflation was raised to 10%. The Federal government says that a comfortable inflation rate sits at 2%.
In an effort to combat inflation, interest rates were raised in 2022.
"If you’re looking to buy a house your mortgage rate has gone up if you're looking to buy a car, the rate for that has gone up," White says. "You probably saw an increase in the rates that your credit card company is charging you.. All because the Fed was trying to get this inflation under control. The best we can hope for is that the increases we see year to year is slowed down to the more historic 2% or so that we’re used to."
Douglas White is an Instructor and Director of the Center for Business and Economic Research at LSUS. He says Covid-19 left a massive dent in America’s economy. In some cities, citizens could not find jobs or affordable homes.
White points out that Shreveport residents might not have seen as severe of an impact. White says Shreveport is insulated from other economic problems because of a few factors. Shreveport has two big sources of economy in entertainment and healthcare.
"So, one of the things… I think we’re kind of counter-cyclical to what happens in the country, you know. We’re healthcare and entertainment based," White says. "So, entertainment, obviously, if there’s a recession, people are going to be less willing to spend on entertainment, but healthcare is one of those you tend to- that’s not very cyclical, right? Most healthcare it’s like, it doesn’t matter how the economy’s doing. If I need it, you know, you've got to use it."
Shreveport also has not experienced drastic population changes like other cities, and in fact, the population is slowly decreasing year by year. When new people do move to the area, it’s easy to add new subdivisions and homes, relieving stress from prices skyrocketing.
It isn’t unusual or detrimental for interest rates to change. The Dust bowl had a significant impact on inflation rates, they fluctuated around war times, and recessions come and go. This doesn’t mean they aren’t serious, but it does mean that we can recover from one.
I tell people all the time. I've studied the economy for years, and I really can sell you the story that we’re slowing down, and I can sell you the story that we’re still relatively off. Of course, that’s part of the problem with the fed," says White. "They have to be looking for the future, right? We’re trying to figure out where we’re going to be six months, nine months from now to try and prevent that, right? So, if we were going into a recession in nine months, we have to act now to make sure we don’t."
White says that he does not expect a recession to occur in the near future. He thinks the economy is just slowing down again after covid, and people can be relieved that this is a natural occurrence. He says that people are more on edge than usual due to the recent election and relying on the promises of politicians can be difficult.
“The good news is, even if we slow down, if we enter into a recession, it shouldn’t be anything like 2008 with the housing crisis. We shouldn’t see anything like we saw with Covid- it should just be a normal downturn,” White says. “We’ve been through this before. The economy is always going to have cycles where we’re doing well, and we're always going to have cycles where we’re not doing as well.”
“Pay attention,” he says. “Because obviously those decisions can affect you. But focus more on yourself and don't overly worry about what’s going on in general. You can’t control what’s happening in general. You can control your own individual situation much better. “
White says people can be comforted by the fact that this slowdown is normal.
This is Alaina Atnip with Red River Radio News.