Appearing on WWL Radio's Newell Normand Show, Gulf Coast Bank & Trust president Guy Williams had some troubling news for listeners: He believes a recession is growing more likely as inflation continues to grow across the nation.
Williams said the inflation rate is "trending toward 10 later this year, and people are very nervous about that."
"Of course, it effects [Federal Reserve] policy and raises the possibility of a recession later on," Williams continued.
He also said the Federal Reserve has not been as proactive as they could be in tamping down the inflation rate, but that a rise in interest rates could be on the way.
"Traditionally, the Fed Funds rate has to be above the level of inflation, and when it's not, the Fed has to raise rates," Williams said. "A Fed Funds rate approaching 8% would devastate the economy. We're already seeing real affordability challenges in the real estate market, but if it got higher, it would just be awful."
He said that with Russia's invasion of Ukraine now exacerbating the existing labor shortage and supply chain issues, the worldwide economy is getting more and more unstable.
"I hoped and economists on both sides hoped for a soft landing," Williams said. "When the Fed says they have the tools to prevent high inflation, what they really mean is, if need be, they'll raise interest rates to the point where the economy will slow down, stop and reverse, which means people will lose their jobs, businesses will close, and net worth will disappear."
"Yeah, it's a tool, but what a devastating tool it is," Williams added.
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