The Fed is poised to send a message that it has the worst inflation in 40 years under control. But many investors and economists are taking a less reassuring signal from the central bank: A recession could come as early as this year.
Market turmoil is adding to the already high levels of gloom reported by American consumers, despite a 3.6 percent unemployment rate that’s giving workers more flexibility to change jobs and negotiate for higher pay. The benchmark S&P 500 Stock Index fell on Tuesday for a fifth straight day.
For now, investors and lenders are trying to figure out how high the Fed will ultimately decide to raise interest rates, a calculation that then immediately begins affecting their behavior even before the central bank follows through. Indeed, the rates on loans to businesses and on what the U.S. government borrows have shot
Those market moves will take time to feed into economic activity, but “when you move faster sooner” it speeds up how quickly a recession might ensue, Swonk said.
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