Former Fed Chair Alan Greenspan: US Economic Recession 'Likely'Greenspan believes a recession is likely thanks to the Fed's aggressive rate hikes intended to fight inflation.

Alan Greenspan is 96. He served five terms as theFederal Reservechair over 19 years and under four presidents. So when he doubts the Fed's recent rate hikes, plenty of people listen.

As CNNreports, Greenspan is an economic adviser toAdvisors Capital Management. On Tuesday, the company publishedcomments from Greenspan on its website的一部分"Year-End Q&A." He was straightforward.

Asked if he thought a recession might benecessaryto bring down inflation, Greenspan said, "A recession does appear to be the most likely outcome at this time."

"While the last two monthly inflation reports did show a deceleration in the rate of price increases," Greenspan continued, "it does not change the fact that prices are still increasing. Indeed, official inflation numbers could remain tame in the near term owing solely to the methodology by which they are measured, most notably housing costs."

"However,"Greenspanconcluded, "I don't think it will warrant a Fed reversal that is substantial enough to avoid at least a mild recession."

According to Greenspan, better wages and widespread employment also "need to soften further for a pullback in inflation to be anything more than transitory."

"So," he says, "we may have a brief period of calm on the inflation front, but I think it will be too little too late."

Regarding interest rate hikes, Greenspan also indicated the Fed is unlikely to relax them for fear of inflation getting worse, possibly putting a volatile economy "back at square one."

"Furthermore," he said, "this could potentially damage the Federal Reserve's credibility as a purveyor of stable prices, especially if the action were seen to be taken merely to protect the stock market rather than in response to truly unstable financial conditions."

Ultimately, Greenspan sounded more optimistic about the economy in2023than not. As far as he's concerned, we've already been through worse:

我不希望2023年动荡。我们去from a Federal Reserve that expected inflation to be transitory to one that deemed seven consecutive rate increases over ten months necessary to tamp down inflation. That is a total increase of 4.25 percentage points in the federal funds target rate, with more expected to come. Add in the massive amount of uncertainty generated by the war in Ukraine and I believe 2022 would be a tough year to top with respect to market volatility.