How bad will a US economic slowdown be?

The US economy is slowing down. That much we all know, says Jeremy Batstone of Charles Stanley Research. The question is: how much is it going to slow down?

The US economy is slowing down. That much we all know. The $64,000

question is how much is it going to slow down? Judging by the recent performance of developed bond and equity markets the vast consensus anticipates that the Federal Reserve will be able to engineer a "soft landing" by cutting the Fed Funds rate sooner rather than later and by doing so aggressively at that. What else do we know? Well, for starters we know that although active rate decisions are on hold the Open Markets Committee maintains a de facto bias towards raising rates again from the prevailing 5.25% level. We also know that with Congressional mid-term elections cropping up on 7th November the Fed is unlikely to want to rock the boat ahead of what is already looking like a very hard result to call. Thereafter it's anybody's guess.

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