Washington D.C. – The nonpartisan Congressional Budget Office is forecasting grim news for the economy as a result of the Federal Reserve’s ill-advised yet repeated interest rate hikes. CBO Director Phillip Swagel stressed the findings of the CBO’s latest Budget and Economic Outlook in a statement: “In response to the sharp increase in interest rates that occurred in 2022, the growth of real GDP (that is, GDP adjusted to remove the effects of inflation) comes to a halt in our projections in 2023. … The unemployment rate rises through early 2024, reflecting the slowdown in economic growth.”
Government watchdog Accountable.US called the CBO’s projections a red flag for the Fed to cease further interest rate hikes that have steered the economy towards a cliff and could cost millions of Americans their jobs.
Will the Fed Finally Listen? As Accountable.US has documented, Federal Reserve Chair Jerome Powell has raised interest rates a staggering eight times since March 2022 over the warnings of a chorus of leading economists, labor leaders, and key lawmakers that staying this course could cost jobs or even bring about a recession. The CBO’s projection that economic growth will hit a wall under high interest rates only reinforces the concerns.
The Fed has blown off warnings for months that excessive interest rate hikes will kill jobs and invite a recession – warnings now reinforced by Congress’ top economists. It’s time for serious self-reflection from the Fed on whether to continue doing more harm than good for the economy. Higher and higher interest rates are stunting economic growth while doing little to combat the leading cause of inflation: corporate greed. It’s time for the Fed to cut its losses on a policy that is not working and get out of the way of efforts from the administration and Congress to rein in rampant corporate profiteering.”