AFMC - Fed Must Risk A Small Recession Now

2024-03-17 08:30:00 ET

Summary

• Leading economic indicators suggest a potential recession in the US in the next 6-12 months. Coincident indicators are decelerating quickly.
• The Fed faces a difficult choice between cutting interest rates to prevent a recession or risking a resurgence of inflation.
• If the Fed cuts rates and inflation surges, it could lead to a disastrous economic and financial crisis.

Many leading economic indicators are suggesting that the US economy could lapse into recession in the next 6-12 months. Examples of such indicators would be PMI future conditions and new order indexes, precipitously falling quit rates and temporary help services employees, and declining hours worked, to name just a few. Most alarmingly, coincident indicators have started to decelerate aggressively in a way that often precedes recessions. For example, recent coincident data on Wholesale Sales , Retail Sales , and Industrial Production all suggest a very serious slowdown in the US economy that could potentially turn into a recession....

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