By
Bilal Hafeez
16-03-2020
Fed’s Panic Cut Signals US Recession Is Here
(1 min read)
We’ve been arguing that COVID should trigger a US recession and now it seems the Fed is worried too. It’s dramatic 100bps cut yesterday brings interest rates back to crisis levels of almost zero percent. Typically, the start of Fed easings is one of the best indicators of an imminent US recession. Almost always, US unemployment surges soon after (Chart 1).
While the easings should in theory help the economy, they usually come at a time when the economy has generated its own downward momentum. This time is likely no different. And while many economists are now revising down their forecasts (see our latest US Recession Tracker [add link]), not many are talking about sharp rises in unemployment.
While the easings should in theory help the economy, they usually come at a time when the economy has generated its own downward momentum. This time is likely no different. And while many economists are now revising down their forecasts (see our latest US Recession Tracker [add link]), not many are talking about sharp rises in unemployment.
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