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U.S. Senator Elizabeth Warren says she is \u201cvery worried\u201d that the Federal Reserve will tip the economy into recession. \u201cThere is nothing in raising the interest rates, nothing in Jerome Powell\u2019s tool bag that deals directly with\u201d the causes of inflation, she explained.<\/strong><\/p>\n U.S. Senator Elizabeth Warren (D-Mass.) discussed inflation and the Federal Reserve raising interest rates during an appearance on CNN\u2019s State of the Union Sunday.<\/p>\n She began by commenting on the speech<\/a> by Federal Reserve Chairman Jerome Powell in Jackson Hole on Friday. \u201cWhile higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,\u201d Powell said.<\/p>\n \u201cI want to translate what Jerome Powell just said,\u201d the senator from Massachusetts said. \u201cWhat he called \u2018some pain\u2019 means putting people out of work, shutting down small businesses because the cost of money goes up, because the interest rates go up.\u201d<\/p>\n Replying to a question about whether she believes it\u2019s a mistake for the Federal Reserve to keep raising interest rates, Warren stressed:<\/p>\n I am very worried about this.<\/p>\n<\/blockquote>\n She proceeded to list \u201cThe causes of inflation \u2014 things like the fact that Covid is still shutting down parts of the economy around the world, that we still have supply chain kinks, that we still have a war going on in Ukraine that drives up the cost of energy, and that we still have these giant corporations that are engaging in price gouging.\u201d<\/p>\n Senator Warren emphasized:<\/p>\n There is nothing in raising the interest rates, nothing in Jerome Powell\u2019s tool bag that deals directly with those, and he has admitted as much in congressional hearings when I\u2019ve asked him about it.<\/p>\n<\/blockquote>\n She continued: \u201cDo you know what\u2019s worse than high prices and a strong economy? It\u2019s high prices and millions of people out of work. I\u2019m very worried that the Fed is going to tip this economy into recession.\u201d<\/p>\n A survey published last week showed that 72% of economists polled by the National Association of Business Economics expect the U.S. economy to be in recession by the middle of next year. Nearly one in five (19%) economists surveyed said the economy is already in a recession, as determined by the National Bureau of Economic Research (NBER).<\/p>\n A different survey by Stifel Financial found that 97% of corporate executives<\/a>, business owners, and private equity investors in the U.S. surveyed believed that the U.S. economy is either already in a recession (18%) or will face one within the next 18 months (79%).<\/p>\n Some people believe that inflation has peaked, including Tesla CEO Elon Musk<\/a>. Meanwhile, JPMorgan CEO Jamie Dimon said there is a chance of \u201csomething worse<\/a>\u201d than a recession coming.<\/p>\nSenator Elizabeth Warren on Inflation and the Fed Raising Interest Rates<\/h2>\n
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