Editor’s note: Rick Smith, who writes The Skinny blog, is editor and cofounder of WRAL TechWire.


RALEIGH – So as the Federal Reserve talks about raising interest rates to fight 40-year-high inflation, Wall Street investors are acting like deer caught in headlights, policy wonks are calculating economic impact on the 2022 elections and the public is wondering: What the heck are we going to do?

Actually, is there anything we can do other than tuck some money in bitcoin (as an inflation hedge and pray it’s not pilfered) and bet on a return to its one-time sky-high prices? From real estate – buying and selling – to home loans and credit card interest rates, let alone hard-to-find groceries that are getting even more pricey, the people are stuck dreading nightly news headlines about pocketbook issues.

What’s next? If you know the answers you’re the next Elon Musk, Jeff Bezos or Epic Games CEO Tim Sweeney.

Rick Smith is editor and cofounder of WRAL TechWire

By the way, what the heck ever happened to Omicron and COVID?

Russia invades Ukraine? Who cares, you might say. Gas just hit $3.50 a gallon (or higher) down the street and your kids’ daycare bill is skyrocketing next semester. That’s real news.

Yeah, you got a nice raise – but it’s percentage points about cost of living.

But, yes, the jobs market remains hot with lots of openings – and chances to make more money.

Yet, counter that point, you can kiss that new job goodbye when a recession hits.

Inflation now higher than expected – 7.5%

Got a headache yet? Heartburn? Gastritis? COVID – again – even if fully jabbed (ouch!) and boosted (ouch again)?

Yes, as Winston Churchill might say, the economy has become “a riddle, wrapped in a mystery, inside an enigma.” How appropriate in these times that WSC was talking about Russia.

It’s pick the poison time behind three doors: Recession or inflation – or pray for a silver bullet (good luck) that cools the latter and doesn’t dowse the former.

Mike Walden (NCSU photo)

So in search of answers, The Skinny sought out resident economic guru Dr. Mike Walden (recently retired from teaching at N.C. State but still a top-drawer go-to source for insight) for some answers.

Questions were poised in a somewhat light-hearted tone (as you will see if you keep reading) but with the understanding that we’re talking about deadly serious issues.

  • What’s worse, inflation and higher prices or layoffs and a slowing economy?  

This is tough question to answer.  Both higher prices and layoffs reduce the economic well-being of households.  The Federal Reserve’s mandate actually requires the Fed to pursue police that contribute to both goals – stable prices and full employment.   But often the Fed has to pick one goal over the other, and now is one of those times.

I interpret the Fed’s view to be they followed policies to encourage employment during the past two years; now they must turn their attention to inflation.  The Fed hopes its interest rate hikes won’t be enough to spark a recession and layoffs.  They want a so-called “soft landing” of bringing the inflation rate down without crashing the economy into a recession.

  • If business slows, kiss goodbye restaurants and a lot of ther businesses – especially small ones – that barely survived COVID. Right?

“Slowing” the economy doesn’t necessarily mean a recession (where the economy actually contracts).  If the Fed is successful with their policy, economic growth and jobs will continue to expand, just at a more modest rate.

Recession coming? Odds go up as Fed moves to raise interest rates

Again, however, the Fed’s “tightening” policy could be strong enough to prompt a recession.  If this happens, many businesses will be in danger of not surviving.

  • If you own a house and are hoping to cash in on rising values/equity you better move RIGHT NOW before mortgage rates get any higher?

Yes.  Some interest rates have already increased in anticipation of the Fed’s future moves.  But there is uncertainty over how much the Fed will increase rates.  So locking in a rate sooner rather than later is the wise move

  • As for BUYERS, better lock in a reasonable rate NOW?


Inflation is bad but by letting that fear/topic dominate the news people are charging a cliff toward economic carnage – and economic suicide

Higher inflation is a big story, so it will be expected, especially since we have not seen the inflation rate this high in 40 years.  Plus, people and businesses should be informed about what policy changes might be ahead, and what they mean.

  • You’ve gotten a raise – good – but even if it’s not matching inflation rate isn’t that better than losing your job?

Certainly, having income – even it is not keeping pace with inflation – is better than having no income !!

  • Hoping to switch jobs? Don’t wait – hiring is the first thing companies will stop then look at layoffs and cost cutting – right?


With the likelihood economic growth will slow this year, hiring activity will also slow.   And in the case that the worst happens – a recession – hiring will stop.

  • A slowdown/recession will take pressure off the supply chain – but who will buy $60,000 trucks even if chips are available?

The best outcome would  be that buying slows down just enough to match supply with demand. Indeed, that’s one of the goals of the Fed.  But if a recession occurs, manufacturers will cut back.   Then, supply chain issues will – at least temporarily – disappear.

  • Hoping to launch a new business? Good luck raising cash when banks tighten credit – right?

With higher interest rates, borrowing will slow – again, this is one intent of the Fed’s policies.  Lending standards would also increase.   Loans will still be made, but to a smaller set of borrowers.

  • The list goes on … as for the politicians, what’s worse: A recession before November or more inflation and at least people are working?

A recession before November is the worst outcome for the Biden Administration and Democrat control of both houses of Congress.

  • My bet is …

The good doctor didn’t answer – and neither will I. All bets are off, baby, as the immortal Dick Vitale would say. 

Hang on, folks, 2022 is going to get real crazy.