Inflation falling, recession looming: Is this what the Fed is waiting for?

Last week's CPI and PPI reports were more positive than expected, signaling that inflation may have stepped out of the sticky price situation and the disinflation process has begun to accelerate. This is exactly what the Fed is waiting for. The only issue the Fed might be concerned about is that labor data remains too optimistic, giving the Fed reason to keep interest rates high to pressure wage inflation and weaken the labor market. However, is labor the key factor for spotting a recession? The answer is "no". Because credit crunch is the signal that a recession is imminent right now. 

However, inflation, recession, and credit crunch are not the US government's only concerns. The debt ceiling deadline still looms over the US Congress, as irresponsibly raising the debt ceiling or defaulting are both unacceptable with recession imminent and deep fiscal budget deficits. 

All the above US macroeconomic difficulties will be analyzed by Viet Hustler in this week's Macro Economy article. 

Disinflation process has begun to accelerate