If Inflation Has Peaked Is Recession Next?

Growing consensus among economists is good news, bad news deal: Inflation may have peaked, but will linger so a damaging recession’s likely next. Upsetting wild cards include plunging home sales & crashing stressed crops...

First, the good news compliments of WSJ that details “there are signs inflation may have peaked,” like lowering gas & commodities prices. Yet, the newspaper wonders, “But, can it come down fast enough?” We’re sort of told it sort of will not. You’ll recall how the economists misjudged the June inflation numbers by underestimating the skyrocketing housing & rent prices & the Federal Reserve Board is set to raise interest rates another 75 base points later this month.

Besides the story on how home sales have declined for the fourth straight month due largely to rising interest rates, other forces that could also upset that “inflation has peaked” mantra might be seen in separate WSJ articles, e.g., in its “Heat Wave Hits US Farms, Stressing Crops and Ranchers’ Herds.” Then, on top of stories dealing with the EU scrambling to replace Russian gas, there’s the headline “Russia Strikes Odessa Port After Signing Deal to Unblock Ukrainian Grain Exports.” Bottom line, cautions the WSJ: Even if inflation indeed comes down, economists see a slow pace of decline” and a “larger recession risk” through the end of 2022.

Davd Soul