The Federal Reserve almost certainly will raise rates by 75 basis points in two months (0.75%). That will further increase the cost of loans, particularly in the housing market. Inflation will not be curtailed right away. That means it could remain near 10%. The combination is deadly to the economy.
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Some economists believe the United States is already in a recession. Consumer confidence, as reported by several experts and research houses, has plunged. Layoffs have started to rise. Venture capital has cracked down on investments. Investors have backed off expectations for earnings. The stock market has virtually crashed.
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Americans last saw what a recession looked like in 2007 through 2009. Unemployment topped 9% for several months. Some economists have argued the current recession will not be as bad because it was not caused by a global financial crisis. While this may be true, millions of Americans will feel the effects.
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Recessions usually are characterized by industries that come close to collapse. This could happen in the hospitality segment, which already has been hit by the COVID-19 pandemic. The airline industry wants to add workers. This increase in expenses has started to work toward the jaws of a recession-driven drop in travel and a jump in jet fuel prices.
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Since a recession triggered by inflation and rising interest rates has not been part of the American economy for decades, it is hard to see how this one will play out. However, because it already has started, that question will be answered quickly.
As Fed Moves Toward 75-Basis-Point Rate Increase, Recession Is Here
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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