Economist Warns a Delayed Recession Could be on the Horizon

(KNSI) — A Midwest economist says between high interest rates and soaring credit card debt, it won’t be near what we saw in 2008, but he sees the signals a delayed recession is on the horizon.

Creighton University economist Ernie Goss says, “This is the longest period since 1955 that we’ve had the Fed pushing rates up like this and we didn’t see a recession, so it’s coming due. I think the last quarter of this year or the first quarter of next year.”

The Federal Reserve has raised interest rates eleven times by 5.25 percentage points since March 2022 to tame inflation.

Goss says the Fed could be setting the economy up for a monetary tightening cycle known as a “soft landing,” like what happened in the mid-1990s following the Gulf War Recession.

He also points to high oil prices and students having to pay back loans as reasons for belt tightening in the coming months. People have also been living off plastic, with credit card debt now at $1 trillion. “The federal government is now having to pull back a little bit on what they’re spending, but that’s not the big issue. It’s the Federal Reserve, really, and we’ve got to pay the price now.”

The Federal Open Market Committee’s next meeting is September 19th and 20th. Whether another interest rate hike is coming is up in the air, as experts say it could be skipped this time, but it doesn’t mean the hikes are done. It depends on how close inflation is to the 2% target rate.

The Consumer Price Index is predicted to reach 3.6% for August, up from 3.2% in July.

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