JPMorgan Chase CEO Jamie Daman says an economic hurricane is coming. It seems like the US economy is going into the toilet. Tesla’s Elon Musk says he has a very bad feeling about the decline. Companies are reducing their earnings forecasts. Oh, and we’re in the midst of an energy and inflation crisis, and stocks are flirting with a bear market.

It is easy to feel miserable about the economy. And it turns out that most Americans do: Only 23 percent (23%) of the American people say economic conditions are “somewhat good” or better, a recent CNN (Media Channel) poll conducted by the SSRS found.

And yet the same Americans keep spending like crazy – because almost everyone has a job. We got another strong jobs report on Friday: The United States added another 390,000 jobs in May. In this context, it’s more than twice the average 186,000 jobs created every month during President Donald Trump’s administration before the epidemic by the U.S. economy – you know, a few years ago, when there were too many jazz about the American economy.

Must Read: US Stock Market rebound faces key inflation test

The Fed is holding back at once

If you feel like the U.S. economy is slowing, you’re not alone. In fact, that slowdown is intentional. The Federal Reserve had been giving the economy a sugar rush since March 2020 by buying billions of dollars in government bonds and corporate debt each month and keeping rates near zero for two years.

The economy rose in the Fed’s supply, and inflation approached a four-decade high. In March 2022, Fed Chairman Jerome Powell finally said, “no more,” and the central bank raised rates. In May, the Fed issued the biggest rate hike in more than 20 years, vowing that the beatings would continue until morale improves.

The strength of the dollar hurts multinationals

I know what you’re thinking: What does this mean for giant mega corporations with large global footprints?

Well, Timmy, it’s not great news. Microsoft this week downgraded its profit and sales forecasts for this quarter because the dollar is so strong.

Must Read: The Fed’s GDP tracker shows the economy could be on the brink of a recession

Yes, now we have another thing to worry about: thanks to the Fed, your money may be worth too much.

Rate hikes help boost the value of the dollar. Dollar to parity with the euro for the first time in two decades. That’s good news if you’re doing some international travel and bad news if you’re a giant American company making money overseas. It is because widgets it sells overseas will suddenly cost more to its customers compared to widgets it sells in the United States of America.

Before you say, “Stay with the man!” remember that these companies pay a lot of money to a lot of people, that they are going to spend it, etc. You take Econ 101. The point is: it’s another thing that’s not very good for the economy.

The economy may be correcting itself

The Fed isn’t the only one helping to slow the economy. Inflation is starting to wear down consumers and retailers. Walmart (WMT), Target (TGT) and a bunch of other big stores said last month that customers are cutting back on their purchases, focusing on needs. Retailers have been downgrading their earnings outlook as they anticipate those clouds on the horizon will approach and darken.

The U.S. electric housing market is also showing signs of running out of sparks: Mortgage rates are vastly higher than they were just a year ago (OK, that’s also the Fed’s fault), driving some potential homebuyers out of the market. Existing U.S. home sales fell for the third straight month in April.

Job growth is also starting to slow down a bit. While adding nearly 400,000 jobs in a month is great, historically it’s less than the 450,000 to 650,000 jobs the U.S. added each month last year. Total jobs in May marked the lowest level since April 2021. And we still haven’t made up for all the jobs lost in the early days of the pandemic. As the economy continues to close that gap, the pace of hiring may slow, because we are reaching full employment and the labor market is naturally running out of steam.

Meanwhile, inflation itself is cooling a bit. Consumer prices were still 8.3% higher in April 2022 than in April 2021, but, hey, that’s less than the 8.5% annual inflation rate in March! So that’s something.

All other things

The problem with the theory that a slowing economy can tame inflation is that government stimulus (both those sweet and sweet stimulus checks and the Fed’s monetary policy) is not solely responsible for the mess we’re in.

Russia’s continued invasion of Ukraine has sent raw material prices soaring, creating a global food crisis. Meanwhile, China has been shutting down its major cities to prevent the spread of COVID-19, turning the world’s second-largest economy southward and exacerbating shortages that have helped push prices almost everything higher.

So what are those doomsayers talking about?

None of this is great news. At the same time, a natural slowdown is fine, if not welcome. The economy has a fever, and the only recipes are more rate hikes and more cowbell, in that order.

RSM’s Joe Brusuelas said he was encouraged by Friday’s jobs report for showing signs of economic cooling. And Jefferies’ Aneta Markowska told CNN that even more contracts would be needed to control inflation, because wages keep rising, fueling more inflation.

So why all the doom and gloom?

Economic detractors seem to be hinting at the same thing: we could face a dire situation in the future if we don’t take the right steps to avoid it.

Labor Secretary Marty Walsh told CNN on Friday that there is “no doubt” that an approximate economic period is possible and said “step-by-step” action must be taken. Dimon said an economic “hurricane” is coming, but the question remains whether it would be a storm or a superstorm.

As my colleague Julia Horowitz noted in her newsletter. The economic data is messy and we rely on the Federal Reserve. The reserve, which has a limited ability to control the causes of inflation and a miserable reputation for predicting when to stop raising rates before it plunges the economy into a recession.

In short, the economy may be going down the toilet, and we can only pray that no one will flush it.

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