On Wednesday, We’ll Know If The Federal Reserve Will End Inflation By Causing A Recession
Published Friday, January 27, 2023 at: 9:30 PM EST
Look for the Federal Reserve Board’s policy statement next Wednesday to help determine whether the inflation crisis ends in a recession.
The Federal Reserve is at the tail end of a historic battle against the worst inflation in several decades. The central bank hiked rates seven times since March 2022 and is expected to raise rates again Wednesday, when its policy statement is released at the conclusion of the Federal Open Market Committee’s monthly two-day meeting.
If the hike is 25 basis points, it will keep alive hopes for averting recession and make a recession in 2023 less likely. If it’s 50 basis points, then the Federal Reserve decided to snuff out the insipid inflation threat even if it makes a recession much more likely.
The latest consensus forecast of the 60 leading economists polled quarterly by The Wall Street Journal is for a mild contraction in the second quarter of 2023. One quarter of negative growth would not constitute a recession, and the final two quarters of 2023 are expected to be positive economic growth, although not strong. The point is, the average leading economist is calling for a soft landing and not a recession.
The Standard & Poor’s 500 stock index closed Friday at 4,070.56 gaining +0.25% from Thursday, and+2.46% from a week ago. The index is up +81.93% from the March 23, 2020, bear market low and -15.13% lower than its January 3, 2022 all-time high.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances.
The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
©2023 Advisor Products Inc. All Rights Reserved.
- Technology Drove S&P 500 1.9% Higher Friday, But Look At Tech's Terrible 2022 Loss
- Here What To Know To Invest Wisely
- Prudence Requires Positioning Portfolios For An Economic Expansion
- 2022 Was The Worst Year For Stocks Since 2008
- 4Q '22 Is Closing Strong, But Recession Expected In 1Q '23
- A Key Principle In Fruitful Investing
- Plan Now For The Next Recovery
- Ending Inflation Will Take Months
- Economists Predict Lackluster 4Q22 Growth; Fed Algorithm Predicts 4.3%
- Amid Darkening News, Positive Economic Signs
- Stocks Soared This Past Week But Economic Pain Is Still Ahead
- Factors Blurring The Likelihood Of A Recession
- Weekly Investor Update
- Stocks Rose 4.7% This Past Week, Amid A Bear Market
- 105 Years Ago In Investing: Conditions Were Much The Same As Today