The American people are a bit on edge these days. There appears to be a rather sizable economic freight train barreling down the tracks in our direction, and we’re not exactly sure how many of our figurative bags need to be metaphorically packed when it arrives.
With unkempt inflation raging, fuel prices going haywire, and a great deal of uncertainty in the air regarding WWIII, many experts have been predicting that an American recession might be on the horizon.
It took until this week for the Federal Reserve to admit it.
Federal Reserve Chairman Jerome Powell conceded on Wednesday that the Federal Reserve’s battle to bring down inflation could trigger a recession.
“It’s certainly a possibility,” Mr. Powell said Wednesday during the first of two days of congressional hearings. “We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential” to tame inflation.
Inflation has been running at the highest rate in 40 years and has proven to be more widespread and more persistent than Fed officials initially thought. Past episodes in which the Fed tightened monetary policy to tame inflation have typically resulted in a recession. Hopes that the outcome could be different thins time—that the Fed might achieve a so-called “soft landing”—have been fading among experts.
Others were a bit more forceful in their assertion.
In an op-ed for Bloomberg, former New York Fed chief Bill Dudley wrote that a recession is “inevitable.’
“If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it,” Dudley wrote. “A recession is inevitable within the next 12 to 18 months.”
The sluggish pace of the White House’s response to any crisis put before them has created a great deal of mistrust among the American people, and Jerome Powell being this late to the party certainly isn’t going to help with that reputation.