Atlanta Fed CEO: U.S. Economy Needs To Undergo Pain Of Recession Now To ‘Avoid Deep, Deep Pain’ Later

During an appearance on CBS’s “Face The Nation,” Atlanta Federal Reserve Bank President and CEO Raphael Bostic warned that the United States would have to undergo economic pain now to bring down inflation in order to avoid even more pain later.

“Inflation is high. It’s too high,” Bostic told host Margaret Brennan. “And we really need to do all that we can to make it come down. And when we think about its source, it’s because we have very high demand.”

“We have not enough supply,” he continued. “What we were hoping would happen is that we’d see some movement on the supply side, to move the supply up so that there wasn’t so much of an auction on goods that are in the marketplace. But that hasn’t happened. And that really has meant that we have had to turn to our policies to try to take demand down.”

Bostic denied the United States has already entered a recession after two consecutive quarters of negative GDP growth, which is the traditional definition of a recession, and he claimed that the economy was “still creating lots of jobs on a monthly basis.”

The Federal Reserve would still have to issue policies that will further reduce GDP growth, Bostic explained, “But I do think that we’re going to do all that we can at the Federal Reserve to avoid deep, deep pain. And I think there are some scenarios where that’s likely to happen.”

“It’s not going to be easy,” Bostic continued. “There will likely be some job losses. But I think if you look over the historical history here and our economic experiences, there’s a really good chance that if we have job losses, it’s going to be smaller than what we’ve seen in other situations. And that’s what I’m banking on.”

Bostic comments came days after the Federal Reserve announced an interest rate hike of 0.75% to combat the inflation crisis, marking the third consecutive 0.75% increase.

According to a report from the Bureau of Labor Statistics, prices rose 0.1% in August and 8.3% over the last year. Core inflation, which excludes volatile gas and energy prices, rose 0.6% in August and 6.3% over the last year.