Long-time Pro Farmer economic consultant Dr. Vince Malanga, president of LaSalle Economics said: “The debate now is whether the economy is headed for a second dip recession, which we think is most likely if the FOMC remains strident in its quest for 2% inflation. Whether a soft landing of trend growth, low inflation, and minimal disruption to labor markets and profits is achievable may depend on the Fed becoming more flexible and quickly. Finally, there’s the stagflation scenario herein growth is weak, but inflation remains stubbornly high, forcing continued significant monetary restraint. This we think is the least likely outcome… A worst-case approach would be to continue ignoring market signals until the economy is clearly in a ditch. Then it would have to reverse course by adding liquidity and risk undoing the progress on inflation that is being made. Given the unknowns associated with balance sheet reduction and the lagged effect of actions already taken, we think it is past time for discretion to be the better part of valor.”
Get more Pro Farmer news and deeper analysis that isn’t available online - start a subscription today. View subscription options.
