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Recession seen as increasingly likely as Fed fights inflation
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US inflation ‘entrenched and spreading,’ ex-Fed official says
The Federal Reserve will probably have to inflict much more pain on the economy to get inflation under control. Growth is already slowing in response to the Fed’s repeated interest rate increases, with the housing market softening, technology companies curbing hiring and unemployment claims edging up. But with inflation proving persistent at a four-decade high, a growing number of analysts say it will take a recession — and markedly higher joblessness — to ease price pressures significantly. A Bloomberg survey of economists this month put the probability of a downturn over the next 12 months at 47.5%, up from 30% in June.
“We have to curb things domestically to help us get where we want to go on inflation,” said Bank of America chief US economist Michael Gapen, who’s forecast a mild recession starting in the second half of 2022. After raising rates in June by the most since 1994, Fed Chairman Jerome Powell and his colleagues are expected to approve another 75 basis-point hike this week and signal their intention to keep moving higher in the months ahead. Powell has said that failing to restore price stability would be a “bigger mistake” than pushing the US into a recession. Fed officials though continue to maintain that they can avoid a recession and execute a soft landing of the economy. They argue that the economy has underlying strengths and have voiced hopes that inflation could ease as quickly as it escalated. NB: HAHAHAHAHAHAHAH Inflation — as measured by the Fed’s favorite gauge, the personal consumption expenditures price index — was 6.3% in May, well above the central bank’s 2% target.
“The chance of a downturn in the next 12 months has risen to 38%, significantly higher than zero when we ran the model a month ago. The model sees a 100% probability of recession in the next 24 months.”
— Eliza Winger, Anna Wong and Yelena Shulyatyeva (economists)
The more popular consumer price index is running hotter: It rose 9.1% in June from a year earlier. Three-quarters of the goods and services in the CPI basket increased at an annualized rate in excess of 4% in June from May. NN: The US economy is already in a recession and it will continue to get worse. As far as the FED… they are proven fuck ups. And they will over tighten the thumb screws…….. As i a depression….