US Economy Faces Potential Recession as Federal Reserve Rate Decisions Loom

As the US economy awaits the Federal Reserve's next interest rate decisions, historical trends hint that these policies could indicate the timing of an upcoming recession.

The analysis by Global Markets Investor on July 7 emphasized the link between the Federal Reserve’s rate hikes and the onset of recessions.

The data shows that the US is now approaching a year since the last rate hike in July 2023, and historical patterns suggest that a recession might soon follow.

RECESSION IN THE US USUALLY COMES WITHIN 18 MONTHS FROM THE LAST FED RATE HIKE:

It has been now 12 months since the last Fed hike in July 2023.

If history is any guide, the US economy should fall into a recession before the end of 2024 or is already in. pic.twitter.com/w1EJSMSH5H

— Global Markets Investor (@GlobalMktObserv) July 7, 2024

The research highlighted the typical delay between the final rate hike and the start of a recession. For example, past recessions have followed the last rate hike with delays ranging from one to 18 months. Given it has been 12 months since the most recent hike, this analysis suggests that the US might experience a recession before the end of 2024 or may already be in one.

Supporting this, Alpha Oracle’s analysis on July 8 used data from the Federal Reserve Economic Data (FRED) to show that recessions often occur when rates begin to decline. This pattern suggests that the Federal Reserve usually cuts rates when an economic slowdown is perceived.

However, the current Federal Reserve appears to be waiting until the economy is on the brink of a recession before reducing rates. This cautious approach aims to balance controlling inflation and avoiding premature easing that might harm economic stability.