We Might Be Headed Toward a Recession, But a 'Bigger Catastrophe' Could Be on The Horizon With rising mortgage rates and persistent inflation, millions are worried about a looming recession. But some experts say our attention should be elsewhere.

By Madeline Garfinkle Edited by Jessica Thomas

Opinions expressed by Entrepreneur contributors are their own.

Witthaya Prasongsin | Getty Images

Mortgage rates reached 7% this week, the highest they've been in nearly 20 years, as the Fed continues efforts to curb persistent inflation. The rapidly rising mortgage rate (more than double what it was this time last year) reflects the ongoing fight to tame inflation and cool the housing market. Such moves by the Fed have historically led to an inevitable recession. However, the current economic climate is unlike history's past, and despite looming recession fears, some economists say we're still not heading toward economic fallout.

Treasury Secretary Janet Yellen said she "doesn't see signs of a recession" on CNN's Erin Burnett OutFront, and that "there were several problems that we could have had, and difficulties many American families could have faced."

In essence: it could be worse — a lot worse.

"These are problems we don't have, because of what the Biden administration has done," she added. "So, often one doesn't get credit for problems that don't exist."

Related: Jeff Bezos Says 'Batten Down The Hatches' About a Possible Recession, but a Top Credit Agency Says It Will Be 'Mild'

It can be difficult to think of the economy moving forward in times when mortgage rates are skyrocketing, inflation remains high and layoffs are happening left and right. Still, the economy and the labor market are stronger than they may appear on the surface, U.S. Secretary of Labor Marty Walsh told CNBC.

"I still think that we're going to have job gains as we move into the end of this year, early next year. A lot of people are still looking at different jobs," he told the outlet. "We saw a lot of moving around over this last course of the year. People leaving jobs, getting better jobs, and I'm not convinced yet that we're headed towards that."

However, although Walsh — like Yellen — agrees we're likely not heading toward a recession, a "catastrophe" of different proportions could be underway.

Walsh pointed to a lack of immigration and childcare reform as possible pressure points that could negatively impact the job market and eventually the larger economy.

Related: Now Is the Time to Press Even Harder for Immigration Reform

The size of the working population in the U.S. is concerning, he told CNBC, and "if we don't solve immigration ... we're talking about worrying about recessions, we're talking about inflation. I think we're going to have a bigger catastrophe if we don't get more workers into our society, and we do that by immigration."

Furthermore, Walsh mentioned that Biden's broken promise to do more for childcare could have similar consequences.

"Childcare is a basic necessity to get millions of women back into the workforce on a full-time basis," he said, per CNBC.

In short, we might not be headed to a recession now, but key changes need to be made to protect sectors of the labor market, or a "bigger catastrophe" than a recession could be on the horizon.

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Branding

How to Build a Strong Brand Identity for Your Early-Stage Startup

Branding might not be your first priority, but neglecting it can hurt your startup. A strong brand identity early on sets the stage for marketing success.

Science & Technology

From Data to Destiny — How AI Can Turbocharge Your Business Future

Are you ready to embrace the power of AI with trusted data? Let's transform challenges into opportunities and propel your business into the future.

Business News

Elon Musk's DOGE Is Hiring People Eager to 'Work Long Hours' to Eliminate 'Waste, Fraud and Abuse' in the Government. Here's How to Apply.

The Department of Government Efficiency is hiring U.S. citizens to help cut spending and headcounts in the federal government.

Business News

'Everyone Can Profit From It': What Is DeepSeek? China's 'Cheap' to Make AI Chatbot Climbs to the Top of Apple, Google U.S. App Stores

DeepSeek researchers claim it was developed for less than $6 million, a contrast to the $100 million it takes U.S. tech startups to create AI.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Uber's CEO Says Drivers Have About 10 Years Left Before They Will Be Replaced

Uber CEO Dara Khosrowshahi says the jobs of human drivers are safe for the next decade, but after that, another type of driver will take over.