White House: U.S. economy has 'strength and resilience' to avoid recession

National Economic Council director Brian Deese has said that the U.S. economy has the "strength and resilience" to avoid a recession.

The Federal Reserve has been increasing short-term rates in every FOMC meeting since March. In the upcoming meeting on November 1-2, the Fed is expected to carry out another 75-basis-points increase. Experts also forecast a 50-basis-points hike in the last FOMC meeting for 2022 on December 13-14.

These two interest rate hikes might increase the short-term rates from 4.25 to 4.5 percent by the end of the year, according to PNC Bank head economist Gus Faucher. In September's FOMC meeting, the target range was around 3 to 3.25 percent.

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“One is that we have a degree of strength and resilience in the labor market and household balance sheets and in business investment. That is continuing to move our economy forward, and that’s really important," Deese said.

"The second is that we are in a stronger position than … frankly, any other country to navigate through this transition without having to give up those gains.”

Moody's head economist Mark Zandi argued that another interest rate hike could occur in January next year. The economist predicted that the Fed would put the monetary tightening “on pause” to ensure slow growth in the job market. According to Zandi, the Fed would do this to hit the two percent inflation target “more broadly.”

Zandi added that stopping rate hikes would allow the economy to avoid a recession. However, if the inflation does not move “in the right direction,” the fed might be more aggressive in its policy, leading to a recession at the end of 2023. The year-to-year inflation data in September revealed an 8.2 percent rate, higher than earlier predictions. From August to September, inflation rose by 0.4 percent.

"But even if the economy doesn’t suffer a recession, it will be a difficult year for the economy, with still high inflation, much less job growth and higher unemployment, and weak stock and house prices," Zandi said.

President Joe Biden addressed the recession forecast, saying the U.S. economy was “strong as hell.” He also discussed the greenback’s newfound strength, which had caused a negative impact on other economies. He blamed other countries’ low economic growth and poor policy.

Low confidence in U.S. economy

The White House's sentiment is not without opposition. The Conference Board’s Measure of CEO Confidence has revealed that 98 percent of company leaders in the U.S. are bracing for a recession in the next 12 to 18 months.

Tesla CEO Elon Musk said that the U.S. had begun entering a recession this week. He argued it would last until the second quarter of 2024. Amazon founder Jeff Bezos also urged people to “batten down the hatches.”

Starwood Capital Group CEO Barry Sternlicht argued that the Fed had used “old data” to hike interest rates, causing the economy to suffer due to high borrowing costs. Sternlicht added the Fed could lead the public toward “social unrest” as confidence in the economic system decreased.

Citadel CEO Ken Griffin also talked about the societal impact a recession could bring, saying, “To be unemployed twice in such a short period of time, the diminution of job skills, career experience, derailment to future aspirations, a belief that the American dream is not achievable—those cultural and tangible impacts are really devastating.”