The Federal Reserve may trigger a recession with its war on inflation, but economists think the downturn will be a mild one.
"So will we get stuck with a recession? Maybe," Blinder wrote in a recent Wall Street Journal op-ed. "The odds were probably above 50% even before the [first quarter] GDP report. But it’s important to note that any recession shouldn’t be deep and long, in contrast with those of the 1970s and early 1980s."
The first economists on Wall Street to predict a downturn – Deutsche Bank strategists, led by Matthew Luzzetti – have projected a recession that begins next April as a result of the Fed's efforts to tame inflation. But the team said it will likely be a "mild" one, much different from those experienced by Americans in 2008 and 2020.
The Fed already voted to lift the short-term interest rate by 50-basis points in May and have signaled that similarly sized hikes are on the table at upcoming meetings as inflation remains near a 40-year high. Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending.
Fed Chairman Jerome Powell has echoed that sentiment in recent public forums and promised the Fed will raise rates as high as needed to cool prices. A man wearing a mask walks past the U.S. Federal Reserve building in Washington D.C., the United States, on April 29, 2020."What we need to see is inflation coming down in a clear and convincing way and we’re going to keep pushing until we see that," he said last month during a Wall Street Journal live event. "If that involves moving past broadly understood levels of neutral we won’t hesitate at all to do that.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Bank economists say U.S. heading toward 'soft landing,' may avoid recession with inflation easingThe economy will continue to expand through 2024 but at a reduced pace, according to a forecast by economists with the American Bankers Association.
Read more »
More people, especially women, wanted to work in MayInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
RBA: Now looking for a 40bp rise to 0.75% next week – ANZNext week, the Reserve Bank of Australia will announce its decision on monetary policy. After GDP data on Wednesday, economists at ANZ Bank shifted th
Read more »
North Korea launches 8 ballistic missiles – and nuke test may be nextThe North fired off the missiles over 35 minutes near the capital of Pyongyang, South Korea’s military confirmed.
Read more »
Labor Market Added 390,000 Jobs In May—Beating Expectations Despite Looming Recession ConcernsEconomists have become increasingly concerned that prolonged inflation could be spurring a wave of layoffs.
Read more »
Which First-Year NCAA Head Coaches Will Have Most Success -The NFL wasn't alone in its turnover among head coaches this offseason – it happened across the collegiate landscape, too. 2flyyJJ says these three head coaches should enjoy the most success in their first years. FrontOffice33
Read more »