ProChain Capitol President David Tawil warned last week that while the Federal Reserve did not increase its baseline borrowing rate at its last meeting, the US economy still faces a long battle with inflation, Fox Business reported.
While appearing on “Mornings with Maria” on Fox Business last Friday, Tawil said he didn’t believe that the Federal Reserve would reach its inflation targets any time soon, saying it will take “a long period of time.”
Tawil said that unlike the markets, which can “take this in stride,” the Fed’s actions will “crush” some “interest-rate sensitive industries,” like the real estate market where there could be a “multi-year” or even a “decade-long” fallout, first in commercial real estate and then eventually in housing.
Echoing other analysts, Tawil predicted that interest rates will likely see another 100 basis-point increase and interest rates could remain that high “for a number of years.”
“There will be a fallout,” Tawil added.
While some sectors, like the tech industry, will remain strong, Tawil believes that the housing market and “other interest rate-sensitive industries” will lag.
Tawil also suggested watching for a shift in the labor market.
He noted that many white-collar companies are ending remote work, which could lead to some workers quitting. Additionally, many employers are ending sign-on bonuses.
Last Wednesday, the minutes from the Federal Reserve’s mid-June meeting were released, showing that some central bank policymakers supported raising rates in June. However, Fed officials ultimately decided to hold them steady for the first time in 15 months.
Many Fed policymakers also expressed a willingness to increase interest rates again before the end of the year.
Economists for the Fed have maintained that a possible weakening labor force coupled with higher interest rates could lead to a mild recession later this year. At the same time, they suggested that the economy could avert a downturn with a “moderately paced recovery.”
