Fed’s Best Hope Increasingly Looks Like A ‘Semi-Hard’ Landing

A historical study by former U.S. Treasury Secretary Summers and Harvard research associate  found that, given the current situation of rising inflation and low unemployment, the U.S. has “a very high probability of a recession in the next 24 months.” Big”.

Although the United States has always blamed the supply chain disruption on the new crown epidemic and the current situation in Russia and Ukraine, it cannot hide the high domestic food and energy prices in the United States and the fact that the inflation rate has been at a high level for 40 years.

Whether or not the U.S. slips into a recession will likely depend on how much the Fed wants to reduce inflation and how much it thinks it needs to raise interest rates to get there.

Ethan Harris, head of global economic research at Bank of America (43.73, 0.66, 1.53%), believes that the Federal Reserve will design a recession in economic growth next year, reducing inflation to 2.6% and moderately pushing up unemployment.

Powell told a meeting of economists on March 21 that in an attempt to wean off demand, the Fed intends to “rapidly” raise interest rates to more normal levels and is prepared to push rates into “restrictive” territory if necessary to achieve Price is stable. U.S. policymakers appear to be “firm” that they are on track for a smooth soft landing of a fast-growing economy.

Diane Swank, chief economist at Grant Thornton, said it was “fantasy” that the Fed didn’t expect unemployment to rise as it tightened credit. She predicts the unemployment rate will rise to 4.8% by the end of next year as the economy slows significantly but hopes to avoid a recession. “I call it a semi-hard landing,” Swank said.

Reviewer overview

Fed's Best Hope Increasingly Looks Like A 'Semi-Hard' Landing - /10

Summary

A historical study by former U.S. Treasury Secretary Summers and Harvard research associate  found that, given the current situation of rising inflation and low unemployment, the U.S. has "a very high probability of a recession in the next 24 months." Big".

0 Bad!