The U.S. Federal Reserve is under pressure to prevent a recession, not just for economic reasons but also to protect its independence. A leading economist warns that if a downturn occurs, the Fed could be blamed, and its credibility may suffer.
Key signs are raising concern. Economic activity appears to be cooling: residential building permits have dropped, hiring is slowing, and inflation, while declining, remains elevated. Tariffs and trade policy uncertainty are adding more stress on manufacturers and export-focused sectors.
The Fed is evaluated by how well it balances controlling inflation without crushing economic growth. It may need to ease monetary policy or adjust interest rates, but such moves carry risk—act too fast and inflation could persist; act too slowly and the economy may slip into downturn.
Observers say the time frame for avoiding a recession is shrinking. Experts are watching data on inflation, job growth, industrial activity, and consumer spending closely, since the path ahead seems increasingly narrow.
