December 12, 2022
Media Advisory: SIU profs can discuss Fed’s likely 7th rate hike, recession concerns
CARBONDALE, Ill. — Two professors from Southern Illinois University Carbondale’s College of Business and Analytic are available for interviews regarding the anticipated announcement this week by the Federal Reserve of the seventh interest rate increase this year as well as inflation and recession predictions by numerous economists.
Kevin Sylwester, professor of economics and director of the School of Analytics, Finance and Economics, can be reached at ksylwest@siu.edu. Scott Gilbert, economics program coordinator, can be contacted at gilberts@siu.edu. Both are available to discuss the rate hike, inflation, growing fears of a recession, and the impact the decisions and situations are having on people and families.
When the Federal Reserve meets Tuesday and Wednesday, Dec. 13-14, it is expected to raise the benchmark interest rate that influences virtually all borrowing costs throughout the economy by about half a point. That would bring the rate to about 3.75-4%, the highest it has been since early 2008. The Fed has been increasing the rate in an effort to bring inflation under control, with a target of around 2% over the long run. While inflation rates have come down somewhat this year, from the record-high peak of 9.1% in June, it was still running about 7.7% in October.
Just before the Fed meets, early on Dec. 13, a new consumer price index report, which tracks price changes on various consumer goods and services, will be released.
Numerous financial experts are convinced that the United States is currently in or approaching a recession as do 65% of registered voters surveyed in a Consult/Politico poll earlier this year, although one hasn’t been declared by the National Bureau of Economic Research, the nonprofit organization that officially makes such a determination.
Among the evidence of a recession is the inverted yield curve, which is the steepest on record, according to Sylwester and Gilbert. An inverted yield curve occurs when short-term government bond yields are higher than long-term yields, and it is typically thought to be a predictor of a recession. In early December, a 10-year Treasury bond yield is about 3.6% while a 2-year bond yield is almost 4.4%.
The sales of existing homes have declined for nine consecutive months while overall pricing has dropped as well. Unemployment rates remain low at about 3.7% according to the latest report in November, and prices of some things, including fuel, have dropped somewhat in recent months. However, November’s producer price index climbed 0.3% over the previous month and is 7.4% higher than the year before while the Core PPI, including food and energy costs, was also higher than anticipated.
The stock market edged slightly higher on Friday before the Dow Jones Industrial Average finished the day down 0.2%, while the S&P 500 was flat and the Nasdaq composite rose 0.1%.