Tags: MidPoint | Steve Beaman | Federal Reserve | rate hike | recession

Steve Beaman: Impending Fed Rate Hike Opens Door to Possible Recession

By    |   Friday, 13 March 2015 02:44 PM

 
The economy may have grown 2.4 percent last year, but we still face the risk of a recession, Steve Beaman, chairman of the Society to Advance Financial Education, told Newsmax TV.
 
And what leaves that possibility open? "It's the reality that the Federal Reserve wants to raise rates right now," Beaman told the network's "MidPoint" show. Economists' consensus forecast is that the Fed will begin lifting interest rates around mid-year.
 
The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008

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"You've seen the [stock] market sell off in the last week. That's directly related to the effect of rising interest rates on the economy," Beaman said. The S&P 500 index has dropped 1.3 percent in the past week and is down 0.7 percent so far this year at 2,045.
 
Other negative factors for the economy: the University of Michigan consumer sentiment index dipped to 91.2 in March, a four-month low, from 95.4 in February, and consumer borrowing is falling, Beaman said.
 
The last recession took place in 2007-09. Prior to that, recessions occurred in 2001 and 1990-91.
 
As for the bank stress results released earlier this week, the main problem is that "there's confusion among the banks as to what exactly the Fed is looking for," Beaman said.
 
Goldman Sachs and Bank of America had to revise their dividend-increase and share buyback plans amid Fed concerns that they had gone too far.
 
Bottom line: the banks are "well capitalized compared to what they were six years ago," Beaman said.

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The economy may have grown 2.4 percent last year, but we still face the risk of a recession, Steve Beaman, chairman of the Society to Advance Financial Education, told Newsmax TV.
Steve Beaman, Federal Reserve, rate hike, recession
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2015-44-13
Friday, 13 March 2015 02:44 PM
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