Ben Bernanke warns this is the Wile E. Coyote economy

1. Don't look down: Ben Bernanke fears that the American economy will soon look like a Looney Tunes ...

Posted: Jun 11, 2018 12:07 AM
Updated: Jun 11, 2018 12:07 AM

1. Don't look down: Ben Bernanke fears that the American economy will soon look like a Looney Tunes episode.

The former Federal Reserve chief questions the wisdom of Congress for waiting until the economy looked healthy and then hitting the gas with massive corporate tax cuts and a burst of spending.

"What you're getting is stimulus at the very wrong moment," Bernanke said last week at an event hosted by the American Enterprise Institute.

He's got a point. The unemployment rate is 3.8%, matching the lowest in half a century. Stimulating the economy further could overheat it, ending the recovery prematurely. And by expanding the federal deficit, Congress has left itself less room to borrow money to fight the next recession.

The other challenge is avoiding a nasty crash when the sugar rush fades from tax cuts.

"It's going to hit the economy in a big way this year and next," Bernanke said. "And then in 2020, Wile E. Coyote is going to go off the cliff and look down."

Of course, it's difficult to forecast that far out. And investors will recall that Bernanke famously said in March 2007 that the impact of the subprime mortgage collapse was "likely to be contained." The Great Recession began nine months later.

Related: Storm clouds are gathering over the global economy

For now, Wall Street doesn't seem worried about a recession. Powered by blockbuster earnings, the Nasdaq raced back to a record high last week. The Dow and S&P 500 have recovered most of their losses from last winter's sell-off.

Still, Bernanke's warning underlines Washington's peculiar sense of timing. Congress hit the brakes on the economy by cutting spending and letting tax cuts expire during the fiscal cliff standoff in 2013 - just as the slow-speed recovery needed a boost.

"I begged Congress," Bernanke said, "not to raise taxes and cut spending as they did. It was the wrong time to do that."

This Congress is making life more difficult for Jerome Powell, the current chairman of the Fed. The central bank, which meets on Wednesday, needs to keep inflation in check by raising interest rates, but not so quickly that it exacerbates a potential slowdown.

That's not to mention the deep uncertainty and higher expenses for businesses caused by President Trump's tariffs and trade threats.

Lindsay Piegza, chief economist at Stifel, told CNNMoney's "Markets Now" last week that she already sees signs that economic momentum is "beginning to wane."

"The risk of recession rapidly rises as we look out to the second half of 2019 and into 2020," she said.

2. AT&T-Time Warner decision: A federal judge is expected to rule Tuesday on the fate of AT&T's $85 billion bid to acquire Time Warner.

The Justice Department sued to block the deal. It argues that the combination would give AT&T the power to charge its competitors more for Time Warner's content, or to block the content entirely from the likes of Comcast, Verizon and Charter.

Time Warner owns HBO, Warner Bros. and the Turner networks, including CNN. AT&T and Time Warner say they need to join forces to compete with new competitors such as Netflix and Amazon. AT&T has argued that prices would not necessarily go up, and that it would have no reason to keep its content from competitors.

Related: AT&T calls on more expert witnesses to undermine DOJ's antitrust lawsuit

3. Rate hike coming: The Federal Reserve is expected to raise interest rates this week for the second time this year. Fed Chairman Jerome Powell will take questions on Wednesday after the announcement.

Investors will be listening for clues about whether the Fed will raise rates once more this year or twice.

The markets will also be eager to hear what Powell says about trade and the economic risk from President Trump's tariffs.

Related: How much longer can the US economy keep rolling?

4. Tariff details: By Friday, the Trump administration is expected to release the final list of Chinese products that will be subject to tariffs - about $50 billion in all. The White House says the tariffs will take effect "shortly thereafter."

The United States reached a deal last week with ZTE, a Chinese tech company, and lifted a ban that blocked the company from buying American parts. The deal drew backlash, but some experts think the Trump administration was trying to win goodwill in trade negotiations with China.

Related: Trump's on-again, off-again strategy on China may backfire

5. Coming this week:

Monday - Net neutrality ends

Tuesday - H&R Block earnings; AT&T-Time Warner decision

Wednesday - Fed interest rate decision and Powell press conference

Thursday - US retail sales for May

Friday - Deadline for White House to publish tariff list

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 735999

Reported Deaths: 13486
CountyCasesDeaths
Marion1007151752
Lake54249977
Allen40946680
St. Joseph36335553
Hamilton35829408
Elkhart28844443
Tippecanoe22475219
Vanderburgh22367397
Porter18946311
Johnson18067381
Hendricks17317315
Clark13036192
Madison12762339
Vigo12501249
LaPorte12086215
Monroe11957172
Delaware10755187
Howard10001218
Kosciusko9466117
Hancock8373142
Bartholomew8098156
Warrick7799155
Floyd7690178
Grant7098174
Wayne7072199
Boone6745101
Morgan6611140
Dubois6166117
Marshall6111112
Cass5876105
Dearborn583178
Henry5785105
Noble565984
Jackson503773
Shelby494396
Lawrence4602120
Gibson437192
Harrison436672
DeKalb430585
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Montgomery425889
Whitley398739
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Steuben391057
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White317754
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Switzerland7948
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Ohio57111
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Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1091623

Reported Deaths: 19528
CountyCasesDeaths
Franklin1268061406
Cuyahoga1132982134
Hamilton804211211
Montgomery518231015
Summit47606955
Lucas42618792
Butler38548585
Stark32661909
Lorain25199486
Warren24390300
Mahoning21795588
Lake20846371
Clermont19880240
Delaware18608133
Licking16488212
Fairfield16327200
Trumbull16196468
Medina15379266
Greene15143244
Clark14096299
Wood13168189
Portage12966206
Allen11740232
Richland11433199
Miami10713220
Wayne8923214
Columbiana8881229
Muskingum8831133
Pickaway8596121
Marion8561136
Tuscarawas8509245
Erie7958155
Hancock6944128
Ashtabula6904172
Ross6876156
Geauga6741148
Scioto6444102
Belmont5978168
Union575448
Lawrence5590102
Jefferson5583151
Huron5462120
Sandusky5380122
Darke5374126
Seneca5311122
Washington5228109
Athens520858
Auglaize494986
Mercer481585
Shelby470293
Knox4513110
Madison439363
Putnam4301101
Ashland426590
Fulton426469
Defiance424697
Crawford3993107
Brown397557
Logan383276
Preble381398
Clinton374163
Ottawa369081
Highland356862
Williams343475
Champaign335358
Guernsey317653
Jackson314152
Perry295950
Morrow287239
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Hardin271964
Henry270366
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Holmes2625101
Van Wert244263
Adams240053
Pike238634
Gallia236749
Wyandot232155
Hocking216462
Carroll192448
Paulding174340
Meigs145540
Noble134137
Monroe132542
Harrison109637
Morgan108823
Vinton84915
Unassigned02
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