BETHESDA, Md. - In case you missed it Sunday morning, FOX 5's "On the Hill" program hosted economic expert Danny Leipziger to talk about the latest on the U.S. economy, including how to control inflation and whether the country is headed for a recession.
The interview comes after a tumultuous week for the U.S. economy where the Federal Reserve hiked interest rates to their highest levels since 2008, and stocks tumbled sharply in response.
The conversation began with FOX 5's Tom Fitzgerald asking Leipziger if the U.S. economy is getting close to a recession.
"Some people would say that because technically we had two quarters of negative growth," Leipziger responded. "I think the overall view in the economy is that we still have low unemployment. People are still spending, so it doesn't feel like a recession."
The conversation then turned to inflation, which is currently one of the biggest issues impacting the U.S. economy currently is high inflation. As mentioned above, the Federal Reserve hiked interest rates this week, in hopes of containing inflation. A move, which Leipziger thinks may not help in the short term.
"I think Powell’s statement shows that the Fed has significant resolve to fight inflation. But the problem is, it takes time," said Leipziger. "I think the reality is that the Fed is late to the game. They continued with expansionary monetary policy for too long. And it's also hard to bring inflation down when the causes of inflation may be food and fuel and fertilizer and supply chain and things that the Fed can't control, so it could take a while."
Fitzgerald followed up that question by asking if the Fed's actions would impact the day-to-day lives of people in the U.S., saying that some sectors like housing could see improvements, but overall the Fed's aggressiveness could lead to a recession.
"It's relatively difficult for the Fed to bring inflation down unless it wants to really produce a real recession, and many people feel that if they continued tightening rates by early 2023, we may well have that," said Leipziger.
Fitzgerald then asked Leipziger what he would do to fix high inflation and the seemingly impending recession, saying that it's a very delicate issue to balance.
"I would look more at the supply side. I think we have seen logistics costs coming down. I think there are things that could be done to help on that side. But I think frankly, as you said, uh, presidents have very little sway over this. People have spoken of price controls and jawboning, but none of that really works," said Leipziger. "So the difficulty is that the Fed was sort of late to the game, and so now they're playing catch up, and they're being super aggressive about it. There are going to be implications, particularly for firms that have to borrow or countries that have to borrow. When interest rates go up, you cause more financial distress."
Make sure to tune into "On The Hill" every Sunday morning on FOX 5, starting at 8:30 a.m.