Usually my response to bad economic news is to ignore it as much as possible. After all, what goes up must come down, and what goes down must come up.
So freaking out over short-term worries about inflation, unemployment, the stock market, gas prices, or whatever generally isn't justified. Typically, when things look to be the darkest, the economic sun is about to turn brighter.
Thus even though I find it difficult to look at my iPhone's stock market app first thing in the morning, because I don't want to get depressed before I've had breakfast (might as well wait for lunch to feel bad), until recently I was feeling pretty much OK about where the American economy was heading.
But now I'm wondering if Jerome Powell, chair of the Federal Reserve, and his organization know what they're doing.
Economics isn't exactly a science like physics. In my perhaps overly cynical opinion, it strikes me as being akin to psychology -- a discipline that aspires to hard science precision, yet falls way short when it comes to being able to accurately model and predict reality.
Currently Powell says the Federal Reserve is deeply committed to fighting inflation. OK, inflation is a big problem, for sure.
However, the rapid rise in interest rates engineered by the Federal Reserve is threatening to produce a recession and high unemployment. Today Politico ran a story, "Dow hits 2022 low as markets sell off on recession fears." Excerpts:
Stocks tumbled worldwide Friday on mounting signs the global economy is weakening just as central banks raise the pressure even more with additional interest rate hikes.
...Energy prices closed sharply lower as traders worried about a possible recession. Treasury yields, which affect rates on mortgages and other kinds of loans, held at multiyear highs.
...The Federal Reserve and other central banks around the world aggressively hiked interest rates this week in hopes of undercutting high inflation, with more big increases promised for the future. But such moves also put the brakes on their economies, threatening recessions as growth slows worldwide.
Besides Friday’s discouraging data on European business activity, a separate report suggested U.S. activity is also still shrinking, though not quite as badly as in earlier months.
So even though the United States and world economies are looking more feeble, the Federal Reserve and other central banks are planning to raise interest rates even higher because inflation is viewed as a more serious problem than a recession.
I guess that makes sense if you're a professional economist who isn't worried about losing their job, or a Wall Street type who makes money no matter what happens on Main Street.
But since a recession will cause millions of Americans to be unemployed, it seems clear that if those future unemployed people were asked whether they'd prefer to have a job or to pay higher prices, they'd say that having a decent regular income is more important than having to spend a bit more of that income due to inflation.
Plus, higher interest rates hurt those with credit card balances, people needing a mortgage to buy a house, construction companies hit by lower demand for homes due to more expensive mortgages, and applicants for other sorts of loans.
Maybe the Federal Reserve will be able to pull off the "soft landing" that's a sweet spot where rising interest rates lower inflation to a tolerable level while the economy avoids a recession.
I'm just getting a sinking feeling that the Federal Reserve interest rate hikes are going to make us wish for more inflation and less unemployment before too long as the United States heads into a recession (which some argue is already here, at least in a mild form).