The same people claiming inflation was transitory are the same ones telling you there is no recession. Isn’t that strange?
This Wednesday’s press conference, following the Fed raising rates by 75-bps, shows how critical the act of sticking to script is for the purpose of public policy. Jeff Cox at CNBC pointed out the latest elephant in the room:
They’re being told by folks like you and the administration that we’re not in a recession, we’re not heading for a recession, frankly, coming from the same people that told them inflation was transitory.
Then he asked point blank:
So what would you tell the public to reassure them now that you feel confident in your forecast going forward and the Fed is ready to respond to a potential downturn in the economy?
Powell’s immediate response:
All I’ve really said is I don’t think it’s likely that the U.S. economy’s in a recession now.
He still claims that bringing inflation down, as well as the so-called “soft landing,” are real possibilities. The potential of a recession came up several times during the session, with Powell committed to staying somewhere between neutral to unsure, or simply not answering the question.
When Steve Liesman, also at CNBC, asked whether Powell shares Biden’s confidence that there is no recession, Powell responded, but not to the question. Liesman was able to ask again, head on:
[INAUDIBLE] the question was whether you see a recession coming and how you might or might not change policy.
Forcing the response:
So, we’re going to be-- again, we’re going to be focused on getting inflation back down. And we-- as I’ve said on other occasions, price stability is really the bedrock of the economy. And nothing works in the economy without price stability…
…it continues but he still managed to not answer the question nor use the word recession.
In another reply, Powell moved from a recession being “not likely” to making a more direct statement:
So, I do not think the U.S. is currently in a recession. And the reason is there are just too many areas of the economy that are performing too well.
Then reiterated:
So, I don’t think the U.S. economy’s in recession right now.
Time will tell. But remember, the last recession, declared in July 2021, officially ended in April 2020 according to the National Bureau of Economic Research (NBER) press release.
If this is the standard of care the NBER takes before declaring a recession, then sometime near the end of 2023 this issue should be resolved. Most likely, it’s only a matter of time until CNBC will have a similar headline as it did on July 19 of last year:
It’s official: The Covid recession lasted just two months, the shortest in U.S. history
The official name of the next recession is yet to be seen; however, it should be called the Central Bank Crisis since the central bank caused the inevitable crisis. Recession or no recession, housing is still at all-time highs. The cost of living continues skyrocketing. The stock market is still destined to meet its date with price discovery. All manners of the system, whether the Federal Reserve, Office of the President, or politicians plotting the newest (inflationary) spending bill are committed to keeping their precious plans afloat.
At this point, trust and credibility on both sides of the political aisle should be at historic lows. This debate on whether or not a recession has arrived is just the next in a proverbial revolving door of distractions for public consumption. Powell, as a political chess piece, sticks to his script as diligently as ever.
