The American public is living through what some might call the worst economic crisis in living memory.
Rapid inflation is hurting consumers and some of the biggest bank failures in history have occurred.
Now the chief economist at Moody’s just issued a major warning to American investors and consumers.
Chairman Powell says that getting inflation back down “is likely to be bumpy”
The economy is in the gutter and Americans are feeling it every day with steady increases in consumer pricing. Two of the three biggest bank failures in U.S. history have occurred in the past month. Meanwhile, the Fed continues to hike rates in hopes of getting a handle on inflation.
The central bankers have made it clear that they believe the only way to get out of this economic crisis is by restricting funding to banks. But with rates higher than they’ve been since the early 2000’s, things are getting scary.
While it may seem things are getting better, even the Chairman of the Federal Reserve doesn’t see it that way. “Although inflation has been moderating in recent months, the process of getting inflation back down to 2%…is likely to be bumpy,” Powell said in testimony to the Senate Banking Committee.
Chief Economist says that “things are going to start to wobble and break”
Mark Zandi, the Chief Economist for Moody’s Analytics, sat down for an interview with CBS News to air his concerns about the faltering economy. He said that while the Fed continues its campaign to deal with inflation by raising rates, other economic woes are inevitable for the United States.
Zandi blamed the recent problems in our banking industry on the same Fed hikes that are supposed to help the economy. He said that while they continue to restrict funds, “things are going to start to wobble and break and it’s going to feel uncomfortable.”
He went on to say that if the rate hikes were helping to reduce the consumer price index, then we’d be in a much better position. However, the fact that inflation is “still high” means that “the next 12-18 months” are going to be trying times for the American economy.
The host of the interview, John Dickerson, pressed him on what that actually means.
Zandi warns “the banking system is fragile”
“It seems weird to go back to something Powell said before all of this banking stuff, but recently, in his testimony in the Senate…Powell talked about how things were going to get bumpy,” Dickerson said, before asking, “what does bumpy mean to you?”
Zandi said the reason for economic turbulence over the past couple of weeks was how quickly the Fed was increasing rates, but added that he doesn’t think it’s over. He said “inflation is still high. The Fed’s still got to get inflation back in.”
He went on to warn that “the banking system is fragile. Everybody knows it.” He cited “deposit runs” as an obvious indicator that “the banking system is under pressure.”
Zandi said that leaders in the banking system should “fess up to it” and “make sure the system is on solid ground.” He added optimistically that he thinks the system is on solid ground and that what “the FDIC and the Treasury and the Federal Reserve have done is adequate.” However, he still wants “to make sure.”
This is an ominous warning from a man who can give an honest perspective. Americans can only hope their leaders make a change that will lead the nation back to prosperity.
Patriot Political will keep you up-to-date on any developments to this ongoing story.