People are rushing to get rid of inflation. How much is the price? The global economy is going through a downturn.

The fight against rising prices will bring some pain to Americans by slowing job growth, making mortgage and credit cards more expensive, and possibly prompting layoffs according to the Federal Reserve chair. He offered a clear signal that the central bank will accept some economic pain if it ends the price surge.

He isn't the only one. The World Bank says that central banks in the UK, Europe, Canada, Switzerland, Indonesia, and more than 80 other countries are doing the same thing. As inflation hovers at worrying highs around the globe, it's not likely that any central banks will ease up soon.

Policymakers' goal to bring inflation to heel has caused downward revisions of forecasts for advanced economies' growth. As economies shift into a lower gear, experts expect job losses and weak wage growth. Businesses are telling shareholders that things will only get harder.

Corporate earnings offer the first signs of an impending downturn

The Fed's hiking cycle is hurting companies. FedEx withdrew its earnings forecast for the rest of the year and warned investors that the slowing economy will cause revenue to come up $500 million short.

Raj Subramaniam, the CEO of FedEx, told Jim Cramer that the global economy is in a recession. He thought so.

Gary Friedman, the CEO of Restoration Hardware, was more colorful when talking about the recession.

We're in a downturn. He told analysts that anyone who thought we weren't in a recession was crazy. The housing market is currently in a recession.

They are not the only ones. The companies in the S&P 500 brought up "recession" in their second-quarter earnings calls. The highest share went back to 2010 when the firm began tracking such mentions. It's more than double the number of citations seen at the start of the recession.

When FedEx's report amplified worries of economic weakness, the broad market fell dramatically. At a time when the S&P 500 is almost 20% below last year's highs, household wealth is going to be reduced.

Economic damage can be caused by lower revenues and diminished profit forecasts. Companies try to protect their margins when the economy slows. Smaller layoffs raises, slimmed-down hiring plans, and widespread are some of the things that show up.

Job losses are happening at some firms. According to a report from The Wall Street Journal, The Gap will be cutting 500 corporate jobs by laying off staff. Revenue and earnings have fallen and this marks a major shift towards cost-cutting.

Walmart, Best Buy, and Bed Bath & Beyond are all planning to lay off employees. Concerns that waning demand will cut into the labor market's health have been heightened by the former's plan to hire fewer workers.

Matthew Bilunas, the chief financial officer of Best Buy, said in an August 30 earnings call that the current macro environment trends could be more challenging.

The Fed is betting on labor market damage. The labor market's unusual tightness has been highlighted by Powell as a factor keeping inflation strong. If the US wants to get over the inflation spell, softer labor market conditions are needed.

It is looking more and more grim. The projections published by the central bank show officials bracing for weaker growth, higher unemployment, and stickier-than- expected inflation. A growth recession is caused by those three factors.

It is possible that the US can pivot to a healthy economic expansion if the Fed can get inflation under control. As policymakers around the world rush to stifle inflation, the threat of a larger downturn looms large.

How a mild US slump becomes a deep global recession

The same problem is being faced by more than 80 central banks. Historically large rate hikes are required to pull inflation lower.

Most people agree with the Fed that weakness today is worth it to make sure inflation doesn't get stuck at four-decade highs.

The Fed raised rates by 0.75 percentage points on Wednesday, placing its benchmark in restrictive territory.

"If we want to set ourselves up and really, really light the way to another period of very strong labor market, we have got to get inflation under control," Powell said. I would like to be able to do that painless. There's not.

The European Central Bank raised its rate by the same amount. The 0.75-point hike by the European Central Bank pushed its benchmark to the highest level since 2011. The officials said they expect to raise rates even higher to guard against the risk of a persistent upward shift in inflation expectations.

On Thursday, the Bank of England raised its interest rates by half a percentage point.

The Fed's outlook could become a problem if so many central banks agree. The world's fight against inflation could cause several countries to go into recession.

It would be worse for everyone. According to a new study from the World Bank, the global economy could go into a downturn in 2023 due to inflation being more persistent than anticipated. Jobs would be lost, high rates would crush some borrowers, and the recovery from the Pandemic would lead to a new crisis.

Ayhan Kose is the acting vice president for equitable growth, finance, and institutions at the World Bank. They could be compounding in tightening financial conditions and steepening the global growth slowdown.

A lose-lose scenario is months away. If inflation doesn't start to cool soon, policymakers can either slam the brakes on their economies or throw the world into a recession.