With the U.S. economy shrinking for the second consecutive quarter, the word recession is being used a lot more than usual. With expenses rising for the average American and consumer confidence declining, the fears are well founded.

CNN Business/Paul R. La Monica
If it looks like a recession and quacks like a recession…

Is the United States heading for a recession? Or is the economy already in one? It — almost — doesn’t matter.

For many Americans, it already feels like a recession. Soaring prices for, well, just about everything, make it tougher to pay for everyday expenses and monthly bills. The stock market has tanked this year. Home sales have started to slip. Consumer confidence is low.

“People are preparing themselves for the fact that we are already in a recession now or that there is a high likelihood we will soon be in one,” said Hady Farag, a partner and associate director at Boston Consulting Group.

The Federal Reserve kept inflation fears in mind as it tried to balance aggressive rate hikes with worries that too much tightening will destroy growth.

The Fed hiked rates Wednesday by another three-quarters of a percentage point, following a similarly supersized move in June.

“The word recession is casting a long shadow over the markets, but in some ways the only way out of this inflationary environment is for central banks to trigger this recession,” said Mabrouk Chetouane, head of global market strategy with Natixis Investment Managers Solutions, in a report this month.

With that in mind, investors have to prepare for the downturn that already appears to be underway, and policymakers need to prepare for slowing growth…or worse.

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Fox Business/Breck Dumas
Mortgage rates add to recession woes

U.S. mortgage rates dipped again after climbing the past two weeks, signaling recession jitters are taking a toll on investors and buyers alike as the housing market continues to cool.

Freddie Mac’s latest Primary Mortgage Market Survey released Thursday shows the average rate for a 30-year fixed-rate mortgage is now at 5.3%, down 5.54% from last week but up from 2.8% a year ago.

The average for a 15-year fixed-rate note also fell, dropping to 4.58% from 4.75%. The same week in 2021, the 15-year rate was at 2.1%.

The declines come as investors sought a safe haven in U.S. Treasurys amid building recession fears ahead of Thursday’s gross domestic product report confirming a second straight quarter of contraction in the economy.

While lower mortgage rates are a welcome sign to potential home buyers, rates remain elevated and demand in the housing market continues to plummet amid sky-high home prices and four-decade-high inflation eating away at Americans’ budgets.

The National Association of Realtors reported Wednesday that its pending home sales index tanked 8.6% in June from the prior month, down 20% from June 2021.

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Kitco/Anna Golubova
Gold to be the standout metal for the rest of 2022 – Bloomberg Intelligence

Following another 75-basis-point hike from the Federal Reserve, gold looks to be the standout metal in the second half of the year, especially in light of lower industrial metals prices signaling deflationary forces coming back to the fore, according to Bloomberg Intelligence.

Following the Fed’s July decision, gold jumped around $30, with August Comex gold futures last trading at $1,749.30, up 1.76% on the day. This comes after gold got stuck in consolidation mode following a sudden drop to the $1,700 an ounce level, which was led by a strong U.S. dollar.

“The 75-bp rate hike at the July meeting could solidify foundations for an elongated bull market in gold and U.S. Treasury bonds. Copper and gold are a bit too cold at the end of July, but we see greater industrial metal headwinds,” Bloomberg Intelligence’s senior commodity strategist Mike McGlone said in a report this week.

Bloomberg Intelligence sees gold as a potential standout in the second half of the year after delivering steady results in the first half of 2022. Year-to-date, gold is down 4.2%.

McGlone is not ruling out deflationary forces making a comeback following Fed’s aggressive rate hikes.

“The Fed hiking rates in 2022 at about 3x the pace expected at the start of the year is a strong headwind for most assets, but it’s the endgame that typically matters to bottom gold. We see plunging copper as a sign of a resumption of deflationary forces to buoy gold,” he said.

In just 40 days, the Fed raised rates by 150 basis points. And that might be enough for gold to find its bottom and kick off the next rally.

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