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no more soft landing…


dasari4kntr
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As part of its inflation fight, the Fed on Wednesday fired off its fourth straight jumbo rate increase of 75 basis points, bringing its policy rate to a range of 3.75% to 4%, the highest level in 15 years.

“No one knows if there is going to be a recession or not,” said Fed Chairman Jerome Powell, in an afternoon news conference Wednesday. “Our job is to restore price stability.” 

Powell said the path to a soft landing for economy has narrowed over the course of the past year, while also signaling that monetary policy could stay restrictive for longer than anticipated as the central bank works to bring inflation down to its 2% target range.

He also said it was very “premature” to focus on a pause in the Fed’s tightening campaign, while declining to give specifics about the potential size of a December rate increase.

Of note, inversions of the 3-month/10-year yield curve have been an accurate predictor of past recessions since 1973, according to TS Lombard, which pegged them as occurring 12 months on average before past economic downturns over roughly the past 50 years.

Stocks buckled during Powell’s afternoon news conference, giving up earlier gains to end sharply lower. The Dow Jones Industrial Average DJIA, -1.55% skid 505 points, ending down 1.6%, while the S&P 500 index SPX, -2.50% fell 2.5% and the Nasdaq Composite Index COMP, -3.36% shed 3.4%, according to FactSet.

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1 minute ago, Vaampire said:

In powell thatha we believe… m kudipi sampesthadu

A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms.

The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update.

The forecast will be unwelcome news for Biden, who has repeatedly said the US will avoid a recession and that any downturn would be “very slight,” as he seeks to reassure Americans the economy is on solid footing under his administration. 

But tightening financial conditions, persistent inflation and expectations of a hawkish Federal Reserve pressing ahead with rate hikes are raising the risk of a contraction.

The model is more certain of a recession than other forecasts. A separate Bloomberg survey of 42 economists predicts the probability of a recession over the next 12 months now stands at 60%, up from 50% a month earlier. 

The forecasts provide a sharp contrast to Biden’s upbeat tone. The president has focused on strong job growth as he campaigns to help Democrats retain their House and Senate majorities in elections three weeks from now. 

But inflation, which has hovered near a four-decade high, has been a drag on Democrats’ prospects in an election where polls indicate the economy is voters’ top issue.

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https://www.marketwatch.com/articles/federal-reserve-inflation-jerome-powell-51667337408?mod=mw_more_headlines

 

few parts from the above article...

 

Critics have pounced on the Fed. Powell’s insistence that rising inflation was “transitory” and would quickly dissipate once the economy reopened more fully has been called “probably the worst inflation call in Fed history” by Mohamed El-Erian, chief economic adviser for Allianz. The economist Stephen Roach has compared Powell to former Fed chair Arthur Burns, whose indecisiveness under intense political pressure led to the crushing inflation of the 1970s. As recently as March 2022, when the Labor Department was reporting a 7.9% annual rise in consumer prices, Powell and the Fed were just wrapping up their injections of liquidity into financial markets.

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For now, outside experts are debating the causes that led to the big policy mistake. Some Fed officials, including Powell, have started to chime in. Following are the four underlying causes of the initial policy error that emerged in interviews with experts. They include the Fed’s new policy framework, Powell’s distrust of forecasts, unintended consequences of some forward guidance the Fed gave markets in 2020, and the nature of the pandemic’s perfect economic storm.

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With the new playbook, the Fed essentially decided it would not raise interest rates at the first sign of a strong labor market, which had become a cardinal rule after the the bout with high inflation in the 1980s. Instead, the Fed would be more patient before using the blunt tool of raising interest rates to increase borrowing costs for businesses and consumers to tamp down inflation

This upended the Fed’s longstanding reliance on Phillip Curve models that say that tight labor markets and wage pressures are a main driver of inflation.

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The rapid economic recovery from the Covid-19 lockdowns led to a burst in demand, fueled by government stimulus payments to consumers and businesses, but also complicated by supply-chain disruptions related to the pandemic. The war in Ukraine was another major factor that pushed up oil prices, and “you can’t blame the Fed for not foreseeing that,” Gertler said. Meanwhile, the slow return to work, retirements and resignations from unpleasant work during the pandemic meant that labor-market shortages pushed up wages.

With the benefit of hindsight, Gertler said, these forces make sense, but economists didn’t foresee them all ahead of time.

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The long history of low inflation in the decade before the pandemic further backed the waters. The Fed and other central banks had been trying and failing to push inflation rates to 2%. There were serious questions about whether central banks could even create inflation because there had hardly been any inflation for some 25 years. The expansionary fiscal and monetary policies coming out of the 2008 financial crisis had not generated a rise in consumer prices above the 2% target. “They just didn’t see this coming,” Gertler said.

Brian Bethune, an economics professor at Boston College, said that the National Bureau of Economic Research made a mistake when it formally called the two-month downturn at the start of the pandemic in March-April 2020 a recession. He said the economy quickly recovered yet the recession label led the Fed and Congress to pour on stimulus that wasn’t needed. 

Instead, Congress and the Fed were worried about the possibility of a new economic depression, and that led lawmakers to pass several massive fiscal relief packages and the central bank to hold interest rates at zero for too long.

 

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55 minutes ago, Vaampire said:

In powell thatha we believe… m kudipi sampesthadu

Not sure what kind of education and exp he has .. put the county and world economic at crisis.  Not sure how he get sleep making every one suffer and Make Rich people Rich. 

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1 minute ago, Hindhustani said:

Not sure what kind of education and exp he has .. put the county and world economic at crisis.  Not sure how he get sleep making every one suffer and Make Rich people Rich. 

Sleepy joe & fowell deadly combination assalu. Never b4 never after… they slept when they were supposed to act. Now panicking after long nap

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ఈ బొంగులో mid term elections..తొందరగా అయ్యి చస్తే సగం శని పోద్ది...

elections..కోసం జాబ్ మార్కట్ రిపోర్ట్స్ ని తెగ manipulate చేస్తున్నారు... 

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21 minutes ago, Hindhustani said:

Not sure what kind of education and exp he has .. put the county and world economic at crisis.  Not sure how he get sleep making every one suffer and Make Rich people Rich. 

There is so much at stake in politics

Not an easy decision

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15 minutes ago, dasari4kntr said:

 

SPY below 300 ante..2 years growth down avvali...

konchem time pattochhu...moving average is still near 400...

C6HzJuH.png

Monna 350 daka vachindi bro so I think dec lo chustham

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