Fed Faces Balancing Act as Rate Hikes Risk Recession Despite Strong Labor Market

Labor market strength has contradicted Fed's goals to tame inflation

Fed forecasts unemployment will rise to 4.1% by end of 2022 as rates stay high

Higher interest rates risk pushing economy from slowdown into recession

Overleveraged consumers now servicing debt could curb spending and slow growth

If growth slows more than expected, Fed may have to cut rates in 2023 despite high inflation