Fed Pause and Credit Squeeze Coming!

There is a credit squeeze coming and the economy will continue to slow. What does this mean for your investments?

Federal Reserve Bank of Chicago President Austan Goolsbee warned Monday that a credit tightening is under way and recession is a possibility.

“The credit crunch or at least the credit squeeze is beginning,” Goolsbee told Yahoo Finance LIVE in an exclusive interview, when asked how he views credit conditions in light of several bank failures over the last two months.

Goolsbee is concerned that a lending slowdown is happening just as an argument over raising the nation's debt limit comes to a head. President Biden and House Speaker Kevin McCarthy are scheduled to sit down Tuesday to discuss ways to avoid a default on the country's debt that could come as early as June 1.

Gooslbee has been through a debt ceiling fight before.

When he served as chairman of the Council of Economic Advisers under President Barrack Obama, he witnessed a standoff between Republicans and Democrats over tying spending cuts to raising the debt ceiling.

The new argument, he said, comes “at the worst possible time.”

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