Jerome Powell didn’t foresee a recession for America

If it’s up to Federal Reserve Chairman Jerome Powell, things aren’t looking bad in America’s so-called recession. In its forecasts for the economy in the coming months, the Federal Reserve is clearly not in the recession camp. President Powell expects the country to maintain even “reasonable” growth.

This does not qualify as recession

“I don’t think it deserves a recession,” Powell said of the U.S. economy’s growth and rising unemployment, which the Fed chief also thinks is not too bad. We can’t talk enough about the exciting outlook for the U.S. economy yet.

The economy is expected to grow by half a percent next year and unemployment will increase by 1.6 million people through December 2023. The recession may be better than expected next year or there may be no recession at all, but that chance seems small.

It is practically impossible to keep interest rates at zero for a long period of time, then raise them above 4 percent and expect the economy to be able to handle it. There certainly comes a point when the pain kicks in, and that moment appears to be approaching for the Federal Reserve.

Back to 2008 page

For the last major recession in the US economy, we have to go back to the years 2007 to 2009. At that time, the housing market collapsed because the Federal Reserve decided to raise interest rates. The only upside is that both households and firms are now in somewhat better financial shape.

This means that the interest costs they pay on their loans have a better ratio relative to their income. Also, the financial sector is much healthier now than it was in 2008. In that respect, America is more stable than it was 14 years ago.

America is confident that the economy can handle it all, but several indicators point to a head in the wrong direction. Either way, we are in for an exciting few months for the global economy.