text: Good morning. Here’s your Early Warning for Thursday, 03 November 2022.TODAY’S BRIEFING:READ TIME: 9 minutes 45 secondsInFocus: Weekly Economic OutlookInside the BeltwayDomestic INTSUMGeostrategic INTSUMLow-Intensity Conflict Activity Rollup & OutlookInFocus: Weekly Economic OutlookFed: The Fed raised the Federal Funds Rate by 75 basis points yesterday afternoon to 3.75-4%, and the long-run for inflation remains unchanged at 2%. Even as over-tightening continues to be a top concern among Fed officials, economists, and institutions, expectations for the neutral rate rise monthly. Powell said during the conference that the ultimate level of interest rates will be higher than previously expected, stating “we still have some ways to go” to get policy “sufficiently restrictive.” He made mention of February during his speech and tried to reduce concern, saying December was still a possibility. The second half of the Fed’s long-term goal is to maximize employment, which Fed Chair Jerome Powell says is still out of balance. It has been the stance of the Fed over the last several months that unemployment will have to rise minimally, with Powell reiterating this narrative yesterday, stating that we’d need softening of the labor market and below-trend growth to achieve these goals.Recession: Several big banks have updated their stance on recession this week, including JP Morgan (JPM) and multiple scenarios from Goldman Sachs. JPM now says that “an underlying shift in the inflation process is underway, likely requiring a recession to return U.S. and global inflation back to central bank targets.” The bank now projects 2023 year-over-year real GDP growth of 1.1% in the U.S. and a global target of 1.9%, noting that growth is and will continue to be weak enough “for advanced economies, that even small adverse shocks could cause domestic recessions.” Goldman Sachs now says, “if the Fed is going to cause a recession, we think it will take more rate hikes than consensus expects.” Consensus expectations are still for rate hikes to pause after December, however, have started to shift later since the Fed’s meeting yesterday afternoon. In its latest scenario projections, Goldman still expects a terminal rate of 4.75% and now predicts a 50% chance of a recession. Worth mentioning, a scenario involving more hikes and higher inflation is rated at 20%, bringing the total probability of adverse outcomes for the U.S. economy to 70%.Analyst Comment: A handful of projections from smart money and institutional investors, including JPM, believe a recession is an expectation for 2023 among consumers. This means that even if we ‘technically’ don’t have a recession next year, cost of living pressures, market conditions, and a decrease in savings rates could still weigh on consumers the way a recognized recession would. – T.W.INSIDE THE BELTWAYWHITE HOUSE: President Biden will attend a rally hosted by the Democratic Party of New Mexico and a political event for Representative Mike Levin of California.CONGRESS: Nothing Significant To Report (NSTR)DEFENSE: Defense Secretary Austin will participate in a briefing with Republic of Korea Minister of National Defense Lee Jong-sup at the Pentagon. STATE: Secretary Blinken will participate in the G7 Foreign Ministers’ Meeting in Munster, Germany.DOJ: The DOJ announced the takedown of a nationwide catalytic converter theft ring. The department is seeking the forfeiture of $545M in connection with the case. DOMESTIC INTSUMENERGY: Following backlash from economists and industry professionals, Biden’s proposed windfall tax is not expected to make it through Congress. Several suggest that the tax would likely discourage investment in the industry and lead to soaring oil prices in an already pressured sector.