Ex-Federal Reserve President Says a Recession is Likely Around the Corner for US
William Dudley, the former president of the New York Federal Reserve, claimed that a recession is “pretty likely” going to sweep across the United States in 2023.
He believes that the Fed’s recent moves as to why a recession will hit the US soon.
“A recession is pretty likely just because of what the Fed has to do,” Dudley said during an interview with Bloomberg early in January. “But what’s different this time I think is that if we have a recession, it’s going to be a Fed-induced recession and the Fed can end the recession by subsequently easing monetary policy.”
That said, Dudley downplayed the potential damage the recession will do to the US economy. He believes that the Fed will make the necessary moves to ensure that the economy gets back on its feet in the long-term.
“I don’t think that there’s a big risk of a financial-instability cataclysm that pushes the economy into a deep recession.”
The Fed has recently raised interest rates and has said it will continue to do so in its efforts to contain inflation. Press TV reported that the Fed’s goal is to bring inflation down to 2% over the next few years.
Bank of America chief economist Michael Gapen believes that the likelihood of the US economy sliding into a recession is quite high. He views 2023 as a potentially harsh year for the American economy.
“I think we’re in a situation where the risk of recession is high, may not be a deep and prolonged one. But we’re in a situation where the economy has recovered very rapidly from- from COVID, and it’s come with a lot of inflation. And the Federal Reserve is trying to slow down the economy, to bring inflation down,” Gapen remarked.
“And in the past, more often than not, that’s coincided with some sort of recession in the US economy and the US labor market. It’s not baked in. It’s not for certain. We may be able to avoid it, but I would agree that the outlook by most people who sit in the position that I do think 2023 could be a difficult year for the US,” he concluded.
The precarious economic state the US finds itself in is the product of bad public policy. It’s not random elements that are causing this. From the centralized banking policy to the bloated regulatory policy, the US economy is beyond centrally-planned.
If we want sustainable economic growth and prosperity, federal involvement in economic affairs must be substantially scaled up.