On Thursday's edition of CNN's The Lead, CNN International news anchor Richard Quest stated that while the White House “tried to spin” the disappointing GDP figures “as a one-off, they cannot ignore the fact that more and more private economists…are now saying a recession in the U.S. is likely next year as the Fed raises interest rates.”
Quest stated that the number does not mean that the recession is coming “but does it mean–is this the canary in the mine for what will happen either later this year or early into next? So, the next quarter is very unlikely to be negative as well. There were unique factors about this particular set of numbers. However, if we look, Jake [addressing host Jake Tapper], at the wider economic position, well, there is more cause for concern. And whilst the White House today has tried to spin this as a one-off, they cannot ignore the fact that more and more private economists, those working for big banks and the like, are now saying a recession in the U.S. is likely next year as the Fed raises interest rates. So, it is a murky picture, which this particular number today, whilst maybe not crucially important, is certainly giving a bell of alarm.”
Quest said that “there's not much” President Joe Biden “can do” about the issue. “But to be clear. There's the economic backdrop. I've compiled a list of issues here, Jake. There's inflation already present in the system due to the monetary policy that was implemented in the last couple of years, you've got COVID's supply shock…, you've also got the increased oil prices as a consequence of the Ukraine conflict, and you've got the Ukraine war and the ramifications of a European slowdown; then you've been worried about what might take place next, and you're dealing with China shutting down. Now, put all that together, throw in the Fed, which is absolutely terrified now by an 8.5-percent inflation rate in the United States, the highest for 40 years, and talk of half-a-percentage-point rate rises for the foreseeable next few meetings. It's true that there's not much the president can do even in the event of… The cake is making itself right now. The ingredients are present, and it is a matter of what direction the Fed is likely to behave due to the direction they see it rising.”
