Reuters
The U.S. economy is shrinking. The Fed’s rate hikes may have only just begun to bite
The U.S. economy contracted for a second straight quarter, the Commerce Department reported on Thursday, a day after the Federal Reserve raised interest rates by three quarters of a percentage point to a range of 2.25%-2.50% in an effort to slow growth and ease price pressures. The report likely won’t change Fed Chair Jerome Powell’s view that an economy that is adding hundreds of thousands of jobs a month is not in recession, and won’t deter him from raising borrowing costs further. But he and colleagues will be parsing it carefully for clues on where their policy tightening to bring down decades-high inflation is already having an effect, where it may yet begin to bite, and whether they are on track for the soft landing they aim for or the harder crash that analysts increasingly fear.
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