Editor’s note: Retired N.C. State economist Dr. Michael Walden is an economist and regular contributor to WRAL TechWire which asked him for his assessment of the latest inflation data released Friday. He sounded grim warnings.
“The various measures of inflation are all saying the same thing – inflation continues to be uncomfortably high, and it doesn’t look like inflation will return to an “acceptable level’ – such as 2% – anytime soon.,” Walden said.
“This means the Federal Reserve will continue to raise interest rates several more times, with the upcoming rate hike likely being another 0.75 percentage point rise.”
- MORE COVERAGE: Workers’ wages rise – but inflation is even higher
The Fed meets next week.
“More rate hikes will lead to more slowing in the the economy, with the ultimate outcome likely being an ‘official’ recession sometime in 2023,” Walden added. He has argued that the U.S. is not in a recession, citing an increasing GDP and strong employment.
Inflation keeps rising; fed could raise interest rates again
Big jump in unemployment ahead?
“Recessions often lead to reductions in employment, which add more challenges to household budgets already impacted by prices rising more than salaries. While some economists think we will have a “unique” recession that avoids job cuts, I think this is too optimistic of a view,” he warned.
“I forecast the unemployment rate will ultimately increase to 5% or 5.5% from its current level of around 3.5%.
There are currently 5.8 million unemployed, federal data shows.
The last time unemployment rate was at 5% was in August 2021, according to Bureau of Labor Statistics via Data Commons.
Walden is not alone in warning about job losses.
The economy will start losing 175,000 jobs a month, Bank of America warned recently.
Economy to start losing 175,000 jobs a month, Bank of America warns
Less inflation vs. fewer jobs
“A 5% jobless rate is still relatively low – especially for a recession – but that is little solace for individuals who lose their jobs,” Walden added.