ALAN BLINDER

For months, the outlook for the U.S. economy has been a mostly bleak one: Inflation hitting a four-decade high, consumer spending weakening, interest rates surging.

The Federal Reserve is cracking down hard on inflation, in hopes of avoiding a repeat of the 1970s, when price hikes were so sustained, they got baked in to people's thinking.

Inflation is sky high. The Federal Reserve wants to bring it back to earth without crashing the economy. But achieving a so-called "soft landing" and avoiding a recession is easier said than done.

Alan Blinder, former Federal Reserve vice chair, thinks that it's likely the U.S. will fall into a recession next year.

Federal Reserve Chair Jerome Powell and his colleagues are embarking on a delicate task: They’re trying to use higher interest rates to bring down sky-high inflation without crashing the U.S. into a recession. The ideal result would be what economists call “a soft landing.” Steering the U.S. economy toward one has been made immeasurably harder by Russia’s invasion of Ukraine and the aftershocks that’s triggered in global energy, commodity and financial markets.

Federal Reserve Chair Jerome Powell and his colleagues are embarking on a delicate task: They’re trying to use higher interest rates to bring down sky-high inflation without crashing the U.S. into a recession. The ideal result would be what economists call “a soft landing.” Steering the U.S. economy toward one has been made immeasurably harder by Russia’s invasion of Ukraine and the aftershocks that’s triggered in global energy, commodity and financial markets.

Federal Reserve Chair Jerome Powell and his colleagues are embarking on a delicate task: They’re trying to use higher interest rates to bring down sky-high inflation without crashing the U.S. into a recession. The ideal result would be what economists call “a soft landing.” Steering the U.S. economy toward one has been made immeasurably harder by Russia’s invasion of Ukraine and the aftershocks that’s triggered in global energy, commodity and financial markets.

The Federal Reserve on Wednesday will launch one of the most difficult tasks a central bank can attempt: Raise borrowing costs enough to slow growth and tame high inflation, but not so much as to topple the economy into recession.

The Federal Reserve on Wednesday will launch one of the most difficult tasks a central bank can attempt: Raise borrowing costs enough to slow growth and tame high inflation, but not so much as to topple the economy into recession. With a war raging in Europe and price increases at a four-decade high, Fed Chair Jerome Powell will seek to engineer a “soft landing”: A gradual slowdown in economic activity that helps curb surging prices, while keeping the job market and economy expanding. “You’ve got to be both lucky and good” to avoid causing a downturn, said Alan Blinder, a Princeton University economist who served as vice chair of the Fed from 1994 to 1996, when the central bank was widely seen as achieving a soft landing.

Prices are jumping as the economy rebounds from the pandemic, but the Biden Administration and the Federal Reserve say a return to 1970s-style inflation is unlikely.

"Zombie fires" may sound like something straight out of science fiction, but they're a real phenomenon that is likely to become more common in the area ringing the Arctic, and possibly the Arctic itself, as climate change continues, a new study finds. Why it matters: The study, published in the journal Nature, provides conclusive evidence that zombie or "holdover fires" exist and can be monitored, and it helps to begin to quantify their impact on global climate change. Get market news worthy of your time with Axios Markets. Subscribe for free.Context: Zombie fires are blazes that ignite and burn in one season and then smolder through the winter by slowly combusting within peat and other soils, emitting smoke but little or no flames. Then they reemerge during the next spring, erupting into flames once again. Numerous zombie fires were reported in Siberia last summer, which featured a particularly severe fire season, and such fires were also anecdotally reported during the summer of 2019, Merritt Turetsky, a University of Colorado professor who studies peat and wildfires, tells Axios. (Turetsky was not involved in the new study.)Peat is damp soil that contains decaying plant material, and when burned, it can release large amounts of global warming pollutants. Zombie fires have long been discussed in certain corners of the wildfire and climate science communities, but with this study, they've finally been quantified. Turetsky describes zombie fires as a "legacy" in the climate, where one fire season can return to "haunt" the following one. "It's like a ghost of last year's fire season continuing to pop up and influence the contemporary season," she said.How they did it: For the new study, researchers focused on fire activity in two sections of boreal forest, one in Canada's Northwest Territories and another in Alaska. They used an algorithm to detect zombie fires using satellite imagery as well as data from the ground. What they found: Holdover fires in boreal forests tend to be more prevalent during long, hot summers, which have become more frequent in recent decades. In general, the Arctic is warming at more than twice the rate of the rest of the globe. The study finds that between 2002 and 2018, zombie fires (referred to in the study as "overwintering" fires) caused about 1% of the total burned area in the study regions. However, this varied considerably — in some years, such blazes accounted for nearly 40% of the total burned area.A key indicator of a zombie fire versus a new ignition, the study concludes, is that new fires tend to start later, when the lightning season commences. In contrast, zombie fires can ignite again as soon as the weather warms up and vegetation begins to dry out. By the numbers: The researchers found that between 2002 and 2018, zombie fires in Alaska and the Northwest Territories emitted 3.5 million metric tons of carbon. The majority of these emissions occurred in just two fire seasons: 2015 and 2010.The study cautions that this may be an underestimate, however, since computer models may not capture well the smoldering phase of these fires. The carbon emissions from zombie fires comprise a relatively small amount (0.5%) of the total carbon emissions from fires in Alaska and the Northwest Territories. "Yet this fraction may grow larger with climate warming," the study states. The big picture: Global warming is already supercharging fire seasons in the Arctic and sub-Arctic, as evidenced by the destructive fire seasons of 2019 and 2020. Some, like Turetsky, are worried recent severe Arctic fire seasons are a sign that climate change is destabilizing ecosystems, with severe fire seasons becoming the norm. There are three main factors that help drive zombie fires and that are tied to global warming: summer temperature extremes, large annual fire extents, and fires that burn deeper into the soil. Already this spring, fires are erupting in Canada and Siberia, with scientists tracking them, often via Twitter, using satellite imagery, Turetsky said. What they're saying: The paper underscores the need for governments to start collecting official statistics on holdover fires and early season peat fires, said climate researcher Jessica McCarty of Miami University in Ohio, who was not involved in the study, in an email to Axios."More importantly, this paper gives our first estimates of how much holdover fires may be contributing to annual burned area totals and from there we can better understand emissions," she said.More from Axios: Sign up to get the latest market trends with Axios Markets. Subscribe for free

– With unemployment still high and the pandemic threatening yet another economic slump, President-elect Joe Biden is assembling a team of liberal advisers who have long focused on the nation’s workers and government efforts to address economic inequality. Biden also selected Wally Adeyemo to be Yellen’s deputy, which would make him the first Black deputy treasury secretary. “They’re fairly conventional liberal economists and experts.”Still, the Biden administration’s ambitious goals will face solid opposition from Republicans in Congress. She first made her mark in the Clinton orbit, and served as policy director for Hillary Clinton’s 2008 presidential race. Bernstein has also worked as a social worker and was an economist at the Economic Policy Institute, a labor-supported think tank.

The Fed's Main Street Lending is geared toward medium-sized companies that are too large for the government's small business lending program and too small to sell bonds or stock to the public. Powell noted that the complexity of the program goes far beyond the Fed's usual lending efforts, which typically involve buying bonds. It is far and away the biggest challenge of the 11 facilities we have set up, Powell said. It has also announced 11 separate lending programs that are intended to support borrowing by businesses, banks and households. Still, Powell has previously said the unemployment rate is likely to peak at between 20% and 25% in May or June.

DoubleLine Capital CEO Jeffrey Gundlach said Tuesday that there's a 90% chance the United States will enter a recession before the year is over. Gundlach also took aim at Treasury Secretary Steven Mnuchin who on Sunday said he was confident that the economy would weather the downturn from the coronavirus outbreak without entering a recession. "Obviously we're going to have a very substantial negative quarter," Gundlach said. "I think you're supposed to be staying liquid, I think you're supposed to be waiting for opportunities," he said. Given the backward-looking nature of economic data some, including former Federal Reserve Vice Chairman Alan Blinder, are saying that the U.S. has already entered a recession.

Steven Mnuchin, U.S. Treasury secretary, speaks during a news conference in the briefing room of the White House in Washington, D.C., U.S., on Saturday, March 14, 2020. Treasury Secretary Steven Mnuchin is confident the U.S. economy will weather the downturn from the coronavirus outbreak, noting he does not expect a recession. "Later in the year, obviously the economic activity will pick up as we confront this virus," Mnuchin said Sunday on ABC. Mnuchin's comments came after the U.S. stock market tumbled last week, ending the longest bull market on record. Alan Blinder, an economist and former Federal Reserve vice chairman, told CNBC last week that the economy is probably already in a recession.

The analysis didn't account for a "Black Swan," a term for an improbable and unforeseen event. Instead, it explored the idea of a "Great Moderation," which is characterized by low volatility, sustainable growth and muted inflation. Michael Darda, chief economist and market strategist, warned that ignoring the yield curve was a mistake. "One frequent refrain is that we now have an upward sloping yield curve and hence recession risk has evanesced. Yet, the curve is, on average, 12 months ahead of the cycle, not an instantaneous indicator of real time recession risk."

The U.S. is probably already in recession thanks to the fear-induced slowdown from the coronavirus, economist Alan Blinder said Wednesday. "I wouldn't be one bit surprised if when we look back at the data, it is decided ... that the recession started in March," Blinder, a former Federal Reserve vice chairman and now a professor at Princeton, told CNBC's "Squawk Alley." The Great Recession was deemed to have started in December 2007, but the NBER didn't declare it until a year later. Blinder said the cause of the current downturn is "fear of shopping" and being in public places where the COVID-19 strain can be spread. "Spending on all of those categories has probably plummeted and much faster than our system catches it."

Former Federal Reserve Vice Chairman Alan Blinder told CNBC on Monday that he would not be surprised if the U.S. were to retaliate against China in the currency markets. Asked whether the Trump administration might try to lower the dollar after China devalued its currency overnight, Blinder said, "I do." Trump on Monday called China's devaluation "currency manipulation, " an allegation denied by China's central bank. Last month, the president had reportedly looked into ways to weaken the dollar to help boost the economy before next year's election. If the yearlong trade war between the world's two largest economies were to erupt into a full-blown currency war, Blinder argued that "nobody wins."

Princeton professor and former Fed Vice Chairman Alan Blinder said Tuesday that political meddling to weaken the dollar by President Donald Trump could create a "swoon" for the currency. "The problem with talking down the dollar is you may get more than you bargained for," Blinder said on CNBC's "Power Lunch. " "And you can kick off a real swoon that nobody wants, probably including President Trump." "A small deviation from the orthodoxy, which is 'never talk about the dollar,' probably doesn't hurt very much," Blinder said. The U.S. Dollar Currency Index, which measures the value of the greenback relative to a basket of other currencies, has risen more than 3% over the past 12 months.