The USA heads towards a recession that could be avoided. One of the top economists in current times has said this while analyzing the financial scenario of the country. Economist Mohamed El-Erian said that mistakes made by Federal Reserve would lead to this recession.
The Mistakes
According to El-Erian, The Fed mischaracterized inflation and thought it to be transitory, which is not needed to be worried. Another mistake, according to the economist, another mistake was made when the Federal Reserve recognized the inflation as high and persistent but made no meaningful efforts. El-Erian also identified policy errors from the Fed’s side.
The Recession
Fears are mounting in the US of an upcoming recession, though the Federal Reserve is trying to win over inflation by increasing interest rates. Mohamed El-Erian and other top economic experts also think the recession is ahead. Jermy Siegel also assumes that the recession risk is very high at this point and criticized no one but the Fed as they slammed the brakes too hard and raised rates of interest to survive.
El-Erian thinks that the Fed has now realized the chances of recession are higher after it is too late. Fed’s mistakes have reached historical levels, noted El-Erian.
Both Siegel and El-Erian thought that the Federal Reserve was sitting comely even when there were enough signs of an upcoming recession, which is one of the most significant policy mistakes in its 110-year-old history. The Fed will have to repair its image and reputation, added El-Erian. He said that apart from overcoming inflation Fed is also required to restore credibility.
Elon Musk, Tesla CEO, backed Siegel’s opinion about the recession situation and Fed’s mistakes. Musk wrote in a tweet that Siegel was very much correct in what he said about the Federal Reserve.
