Plentiful savings could save the US from recession despite Fed rate hikes
The Federal Reserve began raising interest rates in March. Of the six hikes so far this year, the past four were back to back three-quarter percentage points each. This aggressive move to bring down four-decade high inflation has sparked worries that it may tip the economy into a recession.
A recent report by Goldman Sachs doesn’t see this happening in 2023, partly because any reduction in demand for workers will come from the huge surplus in vacancies as opposed to layoffs. Helping to keep the economy growing and keep demand for workers is the large amount of savings that both consumers and corporations are still sitting on.
This monetary cushion it is predicted should keep the economy afloat as long as the Fed doesn’t overshoot with rate hikes. The next meeting of policy makers is scheduled for 13-14 December.
