Powell says recession ‘a possibility’ but not likely
Federal Reserve chairman Jerome Powell says the central bank is committed to regaining control over inflation, even as he acknowledged the Fed has little power to address its most visible symptoms at the gas pump or the supermarket.
The central bank is under growing pressure to combat inflation, which hit a four-decade high of 8.6% in May.
"We need to get inflation back down to 2%," Powell told lawmakers. "We're using our tools to do that. And the public should believe that we will get inflation back down to 2% over time."
I wonder just how accurate that 8.6% increase is.
Powell also said this:
"The U.S. economy for now is strong. Spending is strong. Consumers are in good shape. Businesses are in good shape," Powell said. "Monetary policy is famously a blunt tool. And there's risk that weaker outcomes are certainly possible. But they're not our intent."
I guess he missed this:
The state of the consumer has really deteriorated faster than we have ever seen in decades. And both consumers and small businesses are basically telling us that the recession is already here. And they have good reason to feel that way. We've seen the largest nominal drawdown. And for the combined bond and stock market on record, there's been nowhere to hide. Mortgage rates have increased at the fastest pace in history.
And then last week's Michigan's Consumer Sentiment Report actually blew away the lows that we have seen over the past 11 recessions. Consumers are hurting that much. It's worse than we saw in the '70s, in the real estate crashes in the '80s, even 9/11 terrorist attack, and the financial crisis in 2008. Even those were not as tough on the consumers as what we're seeing today. Not even the pandemic lockdowns.
Submitted June 23, 2022 at 09:00AM by lh7884
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