WASHINGTON - Potential Republican control of at least one chamber of the US Congress sets the stage for economically risky battles in 2023 over federal spending limits and the government’s response should a recession develop.
“A similar scenario could play out next year,” Goldman Sachs analysts wrote in an election post-mortem that put the odds in favor of Republican control of the House. The political and economic battle over inflation remains underway, however, with a pivotal period approaching in which either the pace of price increases will abate, or the Fed will feel it necessary to raise rates even higher than currently anticipated in a fresh hit to the economy.“Bringing supply and demand back into alignment may require still more from us, creating risk to the broader economy,” Richmond Fed President Thomas Barkin said on Wednesday.