The danger of a hard landing in the United States adds to concerns around the world.
fell for the fifth straight week, in the latest sign that the labor market remains too hot for the central bank’s comfort.Though strong hiring is good news for American workers, many economists have said that unemployment will need to increase before inflation cools.
“Higher-for-longer inflation, more aggressive Fed monetary policy tightening and negative spillover effects from a weakening global backdrop will combine to push the U.S. economy into a mild recession,” the firm said in a note to clients.Since 1981, U.S. and global growth have largely moved in tandem, according to Citigroup research.
The big worry is Europe, which is struggling to adjust to the loss of Russian natural gas supplies. Moscow reacted to European sanctions after has raised rates twice since July to curb inflation that tops 9 percent — and plans more such moves despite a weakening economy.“It’s their most dramatic shift in policy since the global financial crisis. The energy supply shock hits them much harder than the U.S.,” said economist Carmen Reinhart of Harvard’s Kennedy School of Government.Some economists say a broader adjustment is underway.
In 2008, when an imploding housing bubble ignited a global financial crisis, the Chinese government stepped up with a nearly $600 billion wave of infrastructure spending, followed by years of generous financing by state banks. The total rescue amounted to more than one-quarter of China’s gross domestic product, far more than the United States spent on stimulus, according to a study by the Organization for Economic Cooperation and Development in Paris.
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