Economist Jeremy Siegel, Professor of Finance at the Wharton School of the University of Pennsylvania, has issued a warning on recession and falling stocks if the Federal Reserve doesn’t cut interest rates in September.
During a recent appearance on CNBC, Siegel explained that a recent rally of the stock market is not sustainable if the Fed keeps rates at the current level. He also warns that the recession is a real possibility, as the US economy is already showing signs of slowing down.
Siegel pointed out a weakening labor market, with fewer job gains and a higher unemployment rate, as well as an inverted Treasury yield curve and the slowing money supply, as warning signs of recession.
He added that the inflation is under control and that the Fed should consider making two rate cuts before the end of the year. According to CME’s FedWatch tool, 72% of investors are betting on a rate cut in September.
“We are in a slowing economy,” Siegel said. “I think it’s really time for Chairman Powell to really tee up in the July meeting a cut in September, and maybe another one in November. I think inflation is definitely under control, and I don’t want to see this slowing economy turn into something worse.”