Analyst Meredith Whitney Warns U.S. Economy Faces Q4 'Reckoning' as Fed Holds Rates Steady

On Tuesday (July 28), analyst Meredith Whitney, known for accurately predicting the 2007 financial crisis, warned that the U.S. economy will face a 'reckoning' in the fourth quarter as stimulus effects fade. High-frequency indicators have deteriorated, with credit card balance growth slowing significantly since May and rising gas prices pressuring household disposable income, she said.

Whitney expects the Federal Reserve to maintain interest rates unchanged at its Wednesday (July 29) decision. She dismissed speculation of a surprise rate hike and noted that Fed Chair Walsh's establishment of five policy working groups has effectively bought decision-makers several months of buffer time.