Federal Reserve attempts to slow inflation by raising key interest rate
FOX Business reporter Gerri Willis has the latest on the move to tackle inflation on 'America Reports.'
Bloomberg executive editor Robert Burgess wrote an op-ed Saturday warning that the Federal Reserve is acting as if it expects a recession.
"Well, that was quick. In just more than a week, US Federal Reserve Chair Jerome Powell has gone from expressing confidence that policy makers will be able to avoid pushing the economy into a recession while rapidly raising interest rates to control inflation to remarking, as he did on Thursday, that a downturn is out of the central bank’s control," Burgess wrote.
HARD TO GET ‘INFLATION DOWN’ WITHOUT CAUSING A RECESSION, HARVARD ECONOMIST WARNS
The article, titled "The Fed Sure Sounds as If It Expects a Recession", argues that Fed Chairman Jerome Powell’s "confidence that the economy can avoid a downturn has taken a beating in just more than a week."
Burgess cites Powell’s recent statements as evidence that the Fed expects an economic downturn in the near future.
"At a press conference on May 4, after the Fed raised its target rate for overnight loans between banks by half a percentage point in the biggest increase since 2000, Powell told reporters that ‘it’s a strong economy’ and nothing suggests ‘it’s close to or vulnerable to a recession.’ Contrast that with comments he made Thursday in an interview with Marketplace public radio, where he said, ‘The question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.’ The factors Powell cited included geopolitical events (the war in Ukraine) and supply chain bottlenecks (China’s Covid-19 lockdowns)," he wrote.
INFLATION HAS ERODED 40% OF SOCIAL SECURITY'S PURCHASING POWER SINCE 2000
Burgess argues that these comments "underscore just how rapidly the economy is deteriorating." He also points to recent surveys of economists as evidence that the economy will likely take a downturn.
"Bloomberg News’s monthly survey of more than 70 economists released Friday showed that they slashed their forecasts for the annual increase in gross domestic product to 2.7% from 3.3% in April’s poll and 3.6% in March. It was 3.9% heading into 2022. It doesn’t take a mathematician to conclude that the trend isn’t the economy’s friend," Burgess wrote. "If that wasn’t concerning enough, economists also put the odds of a recession happening within one year at 30%."
CLICK HERE TO GET THE FOX NEWS APP
Burgess also points to low consumer confidence as another indicator that the economy is in trouble. While Burgess describes an economic downturn as "increasingly looking unavoidable", he does say he expects it to be mild.
"As my Bloomberg Opinion colleague Allison Schrager explained this week, there’s every reason to believe the next downturn will be mild, and perhaps barely noticeable, unlike the painful recessions of 2001 and 2008-09," Burgess wrote.