Fed Footwork

In 1965, 1984, and 1994, the Fed raised rates to cool an overheating economy and a recession didn’t ensue. Unfortunately, now consumer confidence is crumbling but more importantly, the yield curve is almost flat, inflation is high and rising, unemployment is microscopic, and real interest rates are deeply negative. Rates will have to rise substantially, and the more rates must rise to cool the economy, the greater the recession likelihood.