The economic indicator flashes a warning sign of a major economic recession

An often-overlooked economic barometer indicated Friday that the US economy is heading into recession – or is already in recession – as the Federal Reserve attempts to curb inflation with a series of rapid interest rate increases.

The Conference Board’s leading indicator of economic indicators showed conditions deteriorated further in October, with the index down 0.8% from the previous month. This follows a 0.5% decline in September.

“US LEI fell for the eighth month in a row, which indicates that the economy may be in recession,” said Ataman Özeldirim, senior director of economic research at The Conference Board.

The recession reflects the worsening outlook among consumers, who are increasingly concerned about skyrocketing interest rates and stubbornly high inflation, as well as a prolonged slump in the housing market.

Democrats slam “dangerous” food price hikes, warning of huge job losses

Shoppers at a Kroger supermarket in Atlanta, Georgia, on October 14, 2022. (Ilia Novelage/AFP/Getty Images)

There is growing expectation on Wall Street that The Fed will cause an economic downturn It is raising interest rates at the fastest pace in three decades to keep up with runaway inflation.

Officials this month approved a fourth straight rate hike by 75 basis points, raised the federal funds rate to a range of 3.75% to 4% — close to restrictive levels — and showed no signs of rate hikes pausing.

In a worrying development, the Fed’s rate hikes have so far failed to tame inflation: The government reported this month that the consumer price index rose 7.7% in October from a year earlier, and is hovering near a 40-year high.

The FED raises interest rates by 75 basis points for the fourth consecutive month

This suggests that the Fed will have to continue to chart its aggressive course, increasing the odds of crushing consumer demand and causing unemployment to rise.

“Let me just say this,” Federal Reserve Chairman Jerome Powell told reporters earlier this month. “It’s too early to think about pausing. When people hear about delays, they think about stopping. It’s too early, in my opinion, to talk about pausing our rate increases. We have a way to cut it.”

US job fair

Job seekers visit booths during the Spring Job Fair at the Las Vegas Convention Center in Las Vegas, Nevada, on April 15, 2022. (KM Cannon/Las Vegas Review-Journal/Getty Images)

Higher interest rates tend to create higher rates on consumer and business loans The economy slows down By forcing employers to cut back on spending.

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Economic growth actually contracted in the first two quarters of the year, as gross domestic product — the broadest measure of goods and services produced in a country — contracted 1.6% in the winter and 0.6% in the spring.

However, it rebounded over the summer, with GDP growing 2.6% year-on-year in the three-month period from July to September.

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