Bloomberg op-ed says Federal Reserve likely expects recession


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Bloomberg editor Robert Burgess wrote a op-ed Warning Saturday that the Federal Reserve is acting as if it expects a recession.

“Well, that was quick. In just over a week, US Federal Reserve Chairman Jerome Powell went from expressing confidence that policymakers will be able to avoid a plunge the economy into a recession while rapidly raising interest rates to control inflation, as he did on Thursday, let a slowdown get out of the central bank’s control,” Burgess wrote.

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The article, titled “The Fed Appears to Expect a Recession,” claims that “Fed Chairman Jerome Powell’s confidence in the economy’s ability to avoid a downturn has taken a hit a bit more one week”.

Burgess cites Powell’s recent statements as evidence that the Fed expects an economic slowdown in the near future.

“At a press conference on May 4, after the Fed raised its target rate for overnight lending between banks by half a percentage point in the largest increase since 2000, Powell told the journalists that “it’s a strong economy” and there is no suggestion “that it is close to or vulnerable to a recession. Contrast that with the comments he made on Thursday in an interview with public radio Marketplace, where he said: “Whether we can execute a soft landing or not, it may actually depend on factors that we let’s not control.” Factors cited by Powell included geopolitical events (the war in Ukraine) and supply chain bottlenecks (Covid-19 lockdowns in China),” he wrote.

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Burgess argues that these comments “highlight how rapidly the economy is deteriorating.” He also points to recent polls of economists as evidence that the economy is likely to experience a slowdown.

“Bloomberg News’ monthly survey of more than 70 economists released on Friday showed they had cut their forecast for the annual increase in gross domestic product to 2.7%, from 3.3% in the April poll. and 3.6% in March. It was 3.9% heading into 2022. It doesn’t take a mathematician to conclude that the trend is not the friend of economics,” Burgess wrote. “If that wasn’t enough, economists have also put a 30% chance of a recession occurring within a year.”

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Burgess also points out that low consumer confidence is another indicator that the economy is struggling. While Burgess describes an economic downturn as “increasingly inevitable,” he says he expects it to be mild.

“As my colleague at Bloomberg Opinion, Allison Schrager, explained this week, there is every reason to believe that the next downturn will be mild, and perhaps barely noticeable, unlike the painful recessions of 2001 and 2008-09.” , wrote Burgess.


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