The Fed is absolutely committed to getting that number down. They are doing that in three ways. They are hiking the federal funds rate. The market is now pricing in a 100 basis point hike at the end of this month. Additionally, it is pricing in a 75 basis point hike in September. This is heavy artillery, but it is not the only thing happening. The Fed is shrinking itโs massively bloated balance sheet. That means that banks are going to have to resume doing the heavy lifting of putting mortgages or treasuries on their own balance sheet or packaging them in a way that will be attractive to other investors. The third thing the Fed is doing is speaking in extremely resolute terms about the need to get inflation down as their only goal. Powell was QUITE clear in his last press conference that a soft landing was likely unattainable.
The bond market is screaming about an impending recession. The yield curve is now heavily inverted. This is probably the single best predictor of recession that we have ever found. Of course, we already know that real growth in the entire first half of the year was almost certainly negative. That is the technical definition of a recession. The 20% fall in the stock market does nothing but confirm that.
In short, your economist friend is absolutely delusional if he thinks there is little risk on a recession. It is already upon us. Please give him my best wishes for whatever career he chooses to pursue after this year.
Put that in your pipe and smoke it. Democrats are going to be victimized by probably the worst showing in a midterm election in the last 150 years. I advise you to lay back and try to enjoy it.