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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.

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

  • The Federal Reserve is attempting a "soft landing" for the U.S. economy, aiming to curb decades-high inflation by aggressively raising interest rates without triggering a recession.
  • Current inflation is driven by strong post-pandemic consumer demand, aggressive spending, and global supply chain issues and geopolitical factors. The Fed's rate hikes, while intended to cool spending, risk increasing unemployment.
  • While the broader economy faces an elevated risk of recession, the commercial aviation industry is currently more resilient due to pent-up travel demand and an ongoing pilot shortage.
  • Economists assess a significant and growing probability (over 50%) of a U.S. recession within the next 12 months, making the Fed's soft landing goal appear increasingly challenging.
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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. 

Michael Wildes

Michael Wildes holds a master’s degree in Logistics & Supply Chain Management, and a bachelor’s degree in Aeronautical Science, both from Embry-Riddle Aeronautical University. Previously, he worked at the university’s flight department as a Flight Check Airman, Assistant Training Manager, and Quality Assurance Mentor. He holds MEI, CFI & CFII ratings. Follow Michael on Twitter @Captainwildes.

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