Does the FED want a recession?

Inflation is at a 40-year high, and the Federal Reserve is raising interest rates aggressively in an effort to bring it down. But some economists are worried that the Fed's actions could trigger a recession.

The Fed's dual mandate is to achieve maximum employment and price stability. In other words, the Fed wants to keep unemployment low and inflation under control. But these two goals can sometimes conflict with each other.

When the economy is overheating, unemployment is low, and inflation is high, the Fed can raise interest rates to cool the economy and slow inflation. But raising interest rates can also lead to job losses and a recession.

So, does the Federal Reserve want a recession? Of course not! But the Fed is willing to risk a recession if it is necessary to bring inflation under control.

The Fed has already raised interest rates three times in 2023, and it is expected to raise rates again at its next meeting in July. These rate hikes are having an impact on the economy. Mortgage rates have risen sharply, and the housing market is starting to cool off.

Other sectors of the economy are also showing signs of slowing down. Consumer spending growth slowed in May, and business investment is also expected to slow in the coming months.

The FED wants job loss to happen for consumer spending to come down-

One of the main ways that the Fed hopes to bring inflation down is by reducing consumer spending. When consumers spend less money, demand for goods and services decreases, and businesses are forced to lower prices.

However, consumer spending is not likely to come down significantly without job losses. When people are employed, they have money to spend. But when people are unemployed, they have less money to spend.

This is why some economists are worried that the Fed's actions could trigger a recession. A recession would lead to job losses, which would reduce consumer spending and help to bring inflation down.

The Federal Reserve is facing a difficult balancing act. It needs to bring inflation under control, but it also needs to avoid a recession. The Fed's actions in the coming months will be critical in determining whether the economy can avoid a downturn.

A passionate plea to the Federal Reserve

Dear Federal Reserve,

I understand that you are in a difficult position. You need to bring inflation under control, but you also need to avoid a recession. But I urge you to be careful not to overshoot the mark.

Raising interest rates too aggressively could trigger a recession, and a recession would be devastating for millions of Americans. It would lead to job losses, home foreclosures, and increased poverty.

I urge you to take a more measured approach to raising interest rates. Give the economy time to adjust to the rate hikes that you have already implemented. And be prepared to pause the rate hikes if necessary.

The American people are counting on you. Please don't let us down.

Additional thoughts

I am particularly concerned about the impact of a recession on the most vulnerable members of our society. Low-income families and people of color are disproportionately likely to be unemployed and to experience financial hardship during a recession.

I urge the Fed to consider the human cost of its actions when making decisions about interest rates.