Following the Federal Reserve policy meeting on Wednesday, Chair Jerome Powell signaled that an interest rate cut was “on the table” for September. This would mark the first rate cut since the Fed began hiking rates in 2022 to combat inflation and it has left them at elevated levels for the past year.

The U.S. stock market rallied on the news with the Dow

DJIA-1.51% closing up 0.2% on Wednesday. The S&P 500

SPX-1.84% closed up 1.6% that day, and the Nasdaq

COMP-2.43% was up 2.6%. Meanwhile, consumers breathed a sigh of relief knowing that credit card rates, auto loan rates and mortgage rates could be going down soon.

However, some people were frightened by the idea of lower rates. A viral chart made the rounds again on social media around the time of the Fed meeting. This chart depicted the U.S. federal funds rate over the years, and overlays when the U.S. economy was in a recession. The chart portrayed a scary trend. The last few times that the Fed cut interest rates from their peak, a recession followed closely behind. With the Fed gearing up to cut rates again, is the U.S. economy due for another recession?

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