Former Trump administration official says U.S. is on the verge of recession

Former Trump administration official says U.S. is on the verge of recession

Larry Kudlow, the former director of the National Economic Council in the Trump administration, told FOX Business that the United States is probably on the front-end of a recession. Speaking on Mornings with Maria after the release of Q 1's GDP numbers, he said he didn't know whether the U.S. is in a recession yet, but he stressed that the economic outlook is not good. Kudlow pointed out the inflation problem, the collapse in consumer confidence, and the expectation that the Federal ReserveFederal Reserve is going to raise rates significantly - more than the central bank has already done in order to try and tame the price hikes.

The Commerce Department's final reading showed that gross domestic product GDP activity, the broadest measure of goods and services produced across the economy, declined at a worse than expected 1.6% annual pace in the first quarter, according to the host of FOX Business. The figure is slightly higher than the department's first and second readings.

A recession is a contraction in GDP activity for two consecutive quarters.

The Labor Department said earlier this month that the consumer price index, a broad measure of the price of everyday goods, including gasoline, groceries and rents, rose 8.6% in May from a year ago. The price of the commodity went up 1% in the one month period from April. The figures were higher than the 8.3% headline figure and 0.7% monthly gain forecast by Refinitiv economists.

The data shows the fastest pace of inflation since December 1981.

Many economists are wondering whether the Fed can achieve the elusive soft landing, the sweet spot between tamping down demand to cool inflation and sending the economy into a downturn. The increase in interest rates will cause higher rates on consumer and business loans, which slows the economy by forcing employers to cut back spending.

The Fed raised its benchmark interest rate by 75 basis points for the first time in nearly three decades, as policymakers intensified their fight to combat red-hot inflation earlier this month.

Federal Reserve Chairman Jay Powell was trying to assure Americans that higher rates will not cause a recession and that tighter policy is necessary to tame prices earlier this month.

Kudlow argued on Wednesday that the Biden administration's overregulate of the energy sector is a cause of the dismal economic picture. He said there was a lot of blame to go around.

There is too much spending and too much regulation of business. The Federal ReserveFederal Reserve was way behind the curve.