Piper Sandler’s head economist predicts a 53% chance of a recession in the US. However, Nancy Lazar, the chief global economist at Piper Sandler, believes that a recession may be necessary to bring inflation under control. Lazar describes the current economic situation as a “bifurcated” economy, which has only occurred twice before and both times ended in a recession.
Large corporations are able to withstand or even benefit from higher interest rates, while consumers are feeling the financial strain. Lazar emphasizes that higher interest rates are necessary to eventually lead to a recession, which would help address issues like excesses and inflation. However, despite this potential for a recession, Lazar stated that it could be necessary to address the inflation problem.
Lazar worries more about persistent inflation than a recession and highlights the fine line that the economy is currently walking. Without taking action, there is a risk that companies and individuals will continue to bid up prices, leading to further challenges in the economy. Despite this potential challenge, Lazar believes that it is important for policymakers to take action now rather than waiting for things to get worse before making changes.