The CEO of Wells Fargo Charles Scharf has warned that there’s “no question” that life is going to get far harder for many Americans before it gets better.
During a Wall Street Journal event this week, Scharf warned that the U.S. economy is about to get far worse.
“It’s going to be hard to avoid some kind of recession,” Scharf said.
In a bid to cool the economy and deal with rampant inflation, the Federal Reserve has already raised interest rates twice so far in 2022.
From April 2021 to April 2022, federal data shows that inflation rose 8.3 percent, reaching 40-year highs.
The soaring interest rates and inflation have led some analysts and economists have questioned whether the United States is careening toward a recession.
However, Scharf stressed that the recession will likely be only mild, noting that consumers are still spending at healthy levels.
“The fact that everyone is so strong going into this should hopefully provide a cushion such that whatever recession there is, if there is one, is short and not all that deep,” Scharf said.
Federal Reserve Chairman Jerome Powell said there may be some “pain” that is “associated” with higher interest rates.
According to Powell, the raised interest rates should reduce inflation and curb demand.
Powell insists that there is no recession on the horizon, however.
The Fed chair argues that strong labor markets and consumer spending are high points.
“It will be challenging, it won’t be easy,” he warned during an interview with the Marketplace business news website last week.
“No one here thinks that it will be easy.
“Nonetheless, we think there are pathways … for us to get there,” he added.
“Whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”
Powell said in the interview that price increases are, in part, due to supply chain issues, although he didn’t delve into specifics about why.
“What we can control is demand, we can’t really affect supply with our policies,” he told the outlet.
“And supply is a big part of the story here.
“But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so.
“So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”
The top two richest men in the world are both flagging the Biden administration’s policy decisions and Congress-passed trillion-dollar spending packages.