Update: What Would a Recession Mean for Aviation?

As talk increases about an economic downturn, two economists weigh in on possible impacts for the industry.

Michael Wildes

Monday, September 26, 2022 at 10:33 AM ET

Verified

Demand for air travel is up, but how would a recession affect things? [File photo: Adobe Stock]

Key Takeaways:

The U.S. economy faces high inflation, fueled by strong post-pandemic consumer demand and global supply constraints, prompting the Federal Reserve to raise interest rates in an attempt to achieve a "soft landing."
Achieving this soft landing is increasingly challenging, with economists predicting a high risk of recession as the Fed's aggressive interest rate hikes aim to cool demand, potentially leading to increased unemployment.
While some parts of the aviation industry, particularly airlines, are currently benefiting from strong travel demand and addressing labor shortages, other sectors like business aviation and flight schools face rising costs and potential slowdowns amidst the broader economic uncertainty.

See a mistake? Contact us.

Jerome Powell, the chairman of the Federal Reserve, is not a pilot, but he started talking like one when the economy began to nosedive earlier this year.

Specifically, Powell said he would try to “land the plane softly,” and that “plane” is the U.S. economy. It’s the biggest economy in the world, and with more than 329 million passengers on board, a lot is at stake because unless he sticks that landing, the effects—and an economic ground stop—could be felt worldwide.