Paul Krugman says the U.S. is headed for a possible recession and the Fed won’t be able to combat it

Paul Krugman says the U.S. is headed for a possible recession and the Fed won’t be able to combat it
Noble laureate Paul Krugman said the U.S. economy may be heading into a recession at a time when the Federal Reserve doesn’t have the firepower to properly combat a slump.

“There seems to be an accumulation of smaller problems and the underlying backdrop is that we have no good policy response,” he said in a Bloomberg Television interview in Dubai.

The headwinds facing the economy prompted the Federal Reserve to this month to halt its interest-rate hiking cycle, which Krugman said was never “grounded in the data” to begin with. “Continuing to raise rates was really looking like a bad idea,” he added.

Krugman isn’t alone in seeing a gloomy outlook for the world’s biggest economy. U.S. chief financial officers in a Duke University survey published in December overwhelmingly said they expect a recession within two years.

“I wouldn’t be as definitive, but it seems pretty likely,” Krugman said.

While Krugman doesn’t expect a crisis of the magnitude of 2008, he said policy makers in Washington would struggle to contain large shocks. The economist, a vocal critic of the Trump administration, said it was hard to see the U.S. leadership “respond in any kind of a nimble way.”

“We’re clearly in worse shape,” he said, citing lower public debt in 2008 and “lots of room” to lower interest rates back then. “And we came into the last crisis with pretty remarkable leadership.”

“Let’s put it this way, our current Treasury Secretary is no Hank Paulson,” he said.

Canadian heavy crude has become too expensive to ship by rail

Core earnings for the fourth quarter from its mining and metallurgy unit could slip to a loss of up to $350 million, SNC says
Read more on National Post
News Topics :
Top Stories
WASHINGTON – The U.S. federal deficit will expand by about $800 billion more than previously expected over the next decade, as recent increases in spending are on track to push...
FILE PHOTO U.S. President Donald Trump speaks about the shootings in El Paso and Dayton in the Diplomatic Room of the White House in Washington, U.S., August 5, 2019. REUTERS/Leah...
Theres a pretty big housing bubble in Canada. By some measures, such as household debt to disposable income, its even bigger than the one in the U.S. a decade ago....
In this Friday March 23, 2001 file photo, Japanese day laborers line up looking for work outside a mission in Tokyo. AP Photo/David Guttenfelder Published Tuesday, December 15, 2015 12 27PM...
WASHINGTON—President Donald Trump on Thursday cast aside concerns about the Federal Reserve’s independence, saying he was “not happy” with the Fed’s recent interest rate increases. Trump told CNBC in an...