The Fed: The Fed could get lucky or things might go wrong. A guide to where the economy might go from here

by | Jul 21, 2022 | Stock Market

Is a recession inevitable? Will the Federal Reserve cause it? Although superlatives about the U.S. economy have been overused in the wake of the pandemic, it is fair to say that the economy is at a remarkable crossroads with outcomes ranging from soft to hard landings and to stagflation all possible.

“I think there are several different possible futures ahead of us,” said Wendy Edelberg, the director of the Hamilton Project and senior fellow in economic studies at the Brookings Institution, during a recent Brooking Institute discussion on inflation. Here is a handy guide for investors interested in how the economy could evolve over the next 17 months. Often the Federal Reserve can remain a bit aloof from the economic data, looking for trends to develop over six months or longer before reacting. Now however, with inflation already at 40-year highs, the Fed doesn’t have the luxury to sit back and observe. It is going to be reacting to every scrap of data. Even food and energy inflation can’t be overlooked in this environment. …

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