New York Fed President Says Economy Will Dodge Recession

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While a slowdown is likely, John Williams doesn’t believe we’re headed for full-on recession.

As consumer prices rise due to a combination of ongoing supply chain issues and souring shopper sentiment, the United States Federal Reserve has been raising interest rates to compensate. As rates hike, fears have begun to mount that the United States is headed for another recession in the not-too-distant future. However, some individuals are trying to stay optimistic, believing that while we will definitely hit a rough patch, we will dodge a full-scale recession.

“A recession is not my base case right now,” New York Federal Reserve President John Williams told CNBC. “I think the economy is strong. Clearly financial conditions have tightened and I’m expecting growth to slow this year quite a bit relative to what we had last year.”

By Williams’s estimates, US GDP profits could drop to 1% to 1.5% for the year, which is definitely far lower than what we’re accustomed to.

“But that’s not a recession,” Williams said. “It’s a slowdown that we need to see in the economy to really reduce the inflationary pressures that we have and bring inflation down.”

While Williams is trying to be optimistic, though, he does concede that the economy needs to improve to completely close out any potential of recession in the future. “My own baseline projection is we do need to get into somewhat restrictive territory next year given the high inflation, the need to bring inflation down and really to achieve our goals,” Williams said. “But that projection is about a year from now. Of course, we need to be data dependent.”

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2 years ago