It’s a confusing time for our economy. Are we in a recession already? Are we heading for one? Prices are high, but consumers are still spending. 75 basis points, not 75 basis points? Will the Fed ever get inflation under control!? It’s a lot of buzz and it can be confusing! That’s why the AP has an explainer of what that all means. You can find it below.
The Associated Press/Paul Wiseman
US economy sending mixed signals: Here’s what it all means
The U.S. economy is caught in an awkward, painful place. A confusing one, too.
Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers are still spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs each month.
In the midst of it all, prices have accelerated to four-decade highs, and the Federal Reserve is desperately trying to douse the inflationary flames with higher interest rates. That’s making borrowing more expensive for households and businesses.
The Fed hopes to pull off the triple axel of central banking: Slow the economy just enough to curb inflation without causing a recession. Many economists doubt the Fed can manage that feat, a so-called soft landing.
Keep reading, here.
Yahoo Finance/Brian Cheung
The Fed’s hard landing for the economy begins today: Morning Brief
The Federal Reserve is trying to land a plane from the high skies of strong economic activity and elevated inflation.
Starting today, it is time — or maybe it has been time — for investors to buckle their seatbelts, stow away their tray tables, and return seats to the upright position.
Because the answers on whether this swoon becomes a “hard” or “soft” landing for the economy are about to start rolling in.
Fed Chairman Jerome Powell, our proverbial economic pilot, has already begun descent of the plane through rate hikes in March, May, and June.
By raising interest rates another 0.75% today, the Fed will bring rates to a range of 2.25%-2.5%, or a “neutral” level estimated to be the point at which any further rate increases would be “restrictive” to economic activity. In September, economists expect the Fed to bring rates into this territory.
Continue reading, here.
CNN Business/Paul R. La Monica
If it looks like a recession and quacks like a recession…
Is the United States heading for a recession? Or is the economy already in one? It — almost — doesn’t matter.
For many Americans, it already feels like a recession. Soaring prices for, well, just about everything, make it tougher to pay for everyday expenses and monthly bills. The stock market has tanked this year. Home sales have started to slip. Consumer confidence is low.
A recent Morning Consult/Politico poll showed that 65% of US voters said in mid-July that they think we’re in a recession….and that’s compared to just 51% saying that in March 2020, the beginning of the US Covid outbreak and the start of the last recession.
And according to a survey last month from Boston Consulting Group, nearly 80% of investors anticipate a US recession will start some time within the next 12 months…and more than half of those surveyed think it will begin before the end of 2022.
You can read the full article, here.