United States: Is it a recession?

Is the Fed forced into a recession and accelerating interest rate hikes for the following purposes …

(Boursier.com) — Has the Fed been forced to raise interest rates at a pace of up to 40 years to put the US economy in recession and counter inflation? I need to ask a question. Elon Musk yesterday determined that the United States was probably already in recession. “These things are gone and the boom will come again,” Musk said at the Miami Beach “All-in” Summit. “Probably one year, maybe 12 to 18 months will be difficult.”

The US economy shrank at an annual rate of 1.4% in the first quarter, but this weakness was primarily due to record trade deficits. Bloomberg reports that the Atlanta Federal Reserve’s GDP Now estimates that gross domestic product will currently increase at a rate of 1.8% in the second quarter.

Concerns about a recession have recently increased as the Federal Reserve tightens monetary policy to curb inflation, which is nearing its highest pace since the early 1980s, according to Bloomberg’s latest monthly survey. Of an economist.

Mohamed A. El-Erian, a former Pimco boss, says the list of former Fed officials is growing, pointing out that monetary policy mistakes and initial reactions are too slow. Therefore, Ben Bernanke decided that he needed to act early in the face of inflation. El-Erian says the Fed now believes it can achieve a modest economic landing, but it was already wrong to judge temporary inflation.

On the economic side of Wall Street today, April retail sales will be announced at 2:30 pm (FactSet consensus + 0.9% compared to last month, + 0.3% excluding vehicles, vehicles and petrol Excluding + 0.8%). The Fed will release April industrial production figures at 3:15 pm (consensus + 0.4% compared to previous month, manufacturing production + 0.3%, availability 78.5%). March inventory (consensus + 1.9%) and business sales will be announced at 4pm. The National Association of Home Builders’ May US Housing Market Index will be released at 4 pm (Consensus 75). Patrick Harker, Charles Evans, Loretta Mester, and especially Jerome Powell of the Fed will speak during the day.

Federal Reserve Chair Powell will speak at a live event in The Wall Street Journal. It should confirm that the Fed is primarily focused on inflation. He is also expected to repeat the Fed’s forecast of a 50 basis point rate hike at the next two meetings, with a rapid push to neutral rates and the possibility that the central bank will push interest rates back into restricted areas. Justified. The market may be most interested in Powell’s view of the impact, even with the recent decline in risk assets. So far, Fed officials have not expressed concern about this issue. They also expressed their desire to see further tightening of fiscal conditions. Other topics of interest revolve around balance sheet size and whether Powell is beginning to see signs that inflation may have peaked.

Goldman Sachs lowered its 2022 US GDP forecast this weekend from the previous 2.6% to 2.4%, and 2023 GDP from the previous forecast of 2.2% to 1.6%. GS cites a tightening of fiscal conditions. Slow growth can also reduce job vacancies and increase unemployment, but investment banks have rejected the idea of ​​excessive deterioration. Tight financial conditions have hampered short-term consumer spending, and low consumer confidence over the last decade suggests that this could continue until June. As a result, GS reduced its second quarter GDP estimates from the previous 2.9% to 2.5%. Morgan Stanley, on the other hand, believes that margin compression and slowing earnings growth could slow earnings growth in the future.