Contemplating the history Fed hikes and recessions
Posted By RichC on May 4, 2023
While waiting for the big TWO TRILLION dollar company that is Apple ($AAPL) to report earning after hours on Thursday (story), I’m contemplating the likely outcome of accelerated interest rate hikes by the Federal Reserve. Obviously concluding that “inflation in transitory,” as the Fed Chair commented after the pandemic, was the incorrect assumption … and it looks as if the latest panic to rapidly slow the overheating economy is now creating a banking confindence problem.
It is never as simple as “one thing” though … as “sticky” inflation has a lot to do with poor management of banks (as in the past), the stupidity in our government when it comes to handing out money as if it grew on trees, spending money we don’t have calling it an Inflation Reduction Act, and targeting America’s energy producers while begging our adversaries to pump more oil. Of course Russia’s invasion of Ukraine was a easy scapegoat and distraction … as was/is the unwillingness of Americans to live within their means … or even go to work.
Nevertheless, trying to slow inflation, deal with the U.S. deficit and debt, and shore-up our underfunded entitlement programs … all the while trying to keep the economy growing, get reelected and prevent a recession. These are just the economic challenges that face the POTUS and those running our government in Washington DC; the success or failure wiil impact everyone living in American and likely the world.
These charts are worth thinking about: Will the rapid rate of increase do more than stress community and regional banks and trigger a recession as it often does?
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