Inflation Here to Stay for Now, ‘Mild to Medium’ Recession on Horizon for US Economy: David Brat

David Brat, dean of Liberty University's School of Business, in Washington on July 28, 2020. Brendon Fallon/The Epoch Times

Inflation will not be going away anytime soon and a “mild to medium” recession could be on the horizon for the United States’ economy, according to former Congressman and current dean of the School of Business at Liberty University in Virginia, David Brat.

Speaking to NTD’s “Capitol Report,“ Brat, who previously served in Congress for Virginia’s 7th District, said he believes that the U.S. economy is ”basically just a carcass laying there” and that an upcoming recession is inevitable after the Federal Reserve raises interest rates.

Brat’s comments come as the U.S. annual inflation rate surged to 8.6 percent in May, surpassing market estimates of 8.3 percent, data from the Bureau of Labor Statistics (BLS) showed.

According to BLS figures, food, energy, and housing, all key drivers of inflation, showed no signs of slowing down, with the former climbing 10.1 percent year-over-year, and energy increasing by 34.6 percent, leaving Americans forking out more for everyday essentials.

“We’ve been living on a sugar high, right,” Brat said, adding that the central bank has been printing “way too much money.”

“So it’s just a matter of when that stimulus wears off,” said Brat. “The Federal Reserve has $9 trillion on its balance sheet, we’re $30 trillion in debt, the federal government just did a $5 trillion spending package and wanted to do another five, which is also inflationary. And so that is starting to taper down. That’s what’s kept our economy afloat.”

“Our economy is basically just a carcass laying there,” Brat continued. “The real economy that we’re going to face coming out of this disaster of the 07/08 financial crisis and now this everything bubble that was constructed by the Federal Reserve, with 0 percent interest rate policy for a decade, is going to cost us for a decade or two.”

Brat, who previously chaired the House Subcommittee on Economic Growth, Tax, and Capital Access, said that Americans will likely see a recession in the future, noting that there would probably not be a “soft landing,” an outcome that Fed officials are hoping for.

“And so you’re going to see, yes, a recession, probably mild to medium. Not some light, soft landing,” Brat said, while encouraging parents to “get your kids ready for the next couple of decades, skill them up, get them in the labor market. Seniors, keep your jobs, keep your benefits.”

“We’re in for a long, extended bumpy ride,” he added.

Brat’s comments come shortly after Goldman Sachs economists said that the U.S. economy is still narrowly on track to avoid a recession, citing improved inflation levels and supply chain pressures, as well as adjustments to the jobs market.

All of the above, economists said, has reduced the risk that Fed officials will have to aggressively raise interest rates to the point that it could bring the country into a full-blown recession. However, critics believe a recession is inevitable within the next one to two years.