Recession Panic Crescendoes With Trio Of 2023 Fed Cuts Seen
The US is "perilously close to a recession," JPMorgan's Michael Feroli said Friday.
The bank slashed its outlook for the world's largest economy citing this week's poor data, which drove a widely-followed real-time estimate of quarterly GDP into contraction territory. The bank still sees an expansion, though, in part because employers are likely to retain workers after struggling with an acute dearth of labor for the better part of two years.
Meanwhile, Larry Summers told Bloomberg's David Wes
As I have said on this site before in the comments section, be careful what you wish for. And a 75 bp hike in Fed funds is not carved in stone. The Fed maybe should raise rates more, but it is not necessary to go so quickly. My base case is still for 50 bps for July, but after that I think there is real uncertainty about monetary policy going forward. Credit spreads have widened and market access for riskier borrowers is closing- Fed funds may be up 150-175 but mortgage rates and junk bond rates are more like up 275-375. Those are more important than Fed funds or US Treasury rates. And let us not forget the (misguided) policy of QT. Should the central bank shorten the duration of its assets- possibly but outright shrinkage of the balance sheet is not necessary and the Fed even admits it does not understand the ultimate results of this policy. If it ain’t broke don’t fix it. Even Larry and Muhammed are having second thooughts now. Have a good holiday weekend to all.