Inflation, The Fed, And Recession: Why Financial Markets Are Struggling

Inflation, The Fed, And Recession: Why Financial Markets Are Struggling

Close up of golden Bull and Bear standing on a Stock Market Newspaper U. S. stock markets continue to struggle amid Fed policy shift, inflation worries, and recession risk. Will inflation persist for long? Will Fed policy result in a soft landing? Is a U. S. recession imminent? In mid-2021, Fed Chair Powell suggested inflation was going to be a temporary, transient issue. I wrote in Forbes. com in August 2021 that inflation would not be temporary, and that it would persist for quite some time (to read the article, click the link below). Inflation is created when demand is greater than supply. The chief cause of today's inflation is the supply shortage caused by the pandemic. Businesses cannot find some needed raw materials and there is a shortage of workers. Coupled with higher gasoline prices, especially diesel fuel, profit margins are compressed. To learn why gas prices are rising, read, The Real Reason Behind Surging Gas Prices. Higher operating costs has reduced corporate profits, which has led to layoffs in some smaller trucking companies. Moreover, Walmart WMT , Target TGT , and other large retailers have reduced their forward estimates citing lower growth due to inflation and supply chain