Economist Stephen Moore said on Monday that the US is already in a soft recession and noted that the Federal Reserve's chances of achieving a soft landing are low.
Moore commented during a discussion about "Varney & Co.", a conservative think tank. His analysis came after Larry Summers, a former Treasury Secretary, said on Sunday that a recession is "almost inevitable."
According to Summers, a recession could happen earlier than previously expected. He made the revelation during an interview with Bloomberg's Wall Street Week. President Joe Biden stated that a recession was not inevitable despite Summers' revelation. He also spoke with Summers on Monday.
Moore noted that he disagrees with both Summers and Biden, and he was positive that the US is already amidst a mild recession.
A recession is defined as a decline in the gross domestic product, which is the broadest measure of the country's economic activity.
In April, it was reported that the US economy started to slow down in the first quarter of the year due to various factors, such as high inflation and labor shortages.
According to the Commerce Department, real gross domestic product contracted at an annual rate of 1.5% during the first three months. This was slightly higher than the department's initial estimate.
Moore said that the data released by the government on Monday showed that the US economy contracted during the first six months of the year. Although it wasn't a catastrophic drop, he said the country is already in a recession.
Chad Oviatt, the Investment Management Director of Huntington National Bank, discussed the macro-economy in The Claman Countdown.
According to Oviatt, the real incomes of Americans have started to fall fast, which means that the country is already in a recession. He noted that people's disposable income is going down by around $2,000 to $3,000 annually.
Can the Fed engineer soft landing?
Moore then noted that the only real question regarding the country's economy is whether it will experience a soft landing or a crash landing.
Economists like Moore are worried that the Fed might not be able to achieve a soft landing, which is when the economy can avoid experiencing a recession without experiencing a significant decline. Rising interest rates can lead to higher loan rates, which then causes companies to reduce their spending.
The Fed recently increased its interest rates by 75 basis points, the first increase in almost three decades. Its policymakers are trying to control inflation by implementing various measures.
Moore said that the economy could get worse in the year's second half due to the implementation of various monetary and fiscal policies. He also noted that the decisions made by the Biden and the Fed over the next couple of months will determine if the US can achieve a soft landing.
"Right now I'm not hearing much positive from this White House about how to fight a recession when they are talking about higher taxes, more price controls, more regulations and more spending," Moore continued. "That will make the problem worse."
Despite the recent increase in interest rates, Jerome Powell, the chairman of the Federal Reserve, tried to reassure Americans that the central bank would not trigger a recession.