Stubbornly high inflation has Wall Street worried that the Federal Reserve will respond by raising interest rates until the United States tumbles into recession, taking the weakening global economy with it.

While analysts say the U.S. economy grew in the third quarter, signs of trouble are multiplying, here and abroad. Higher mortgage rates are chilling the U.S. housing market, energy shortages are hurting German factory output; and recurring coronavirus lockdowns are hobbling Chinese businesses.

The Fed and other central banks are tightening credit to fight historically high inflation even as three of the world’s main economic engines – the United States, Europe and China – are sputtering. With the United States and other governments also reducing spending on pandemic relief measures, the global economy is getting less support from policymakers than at almost any time in 50 years, the World Bank said on Thursday in a new report that warned of rising global recession risks.

“I see a bumpy path ahead,” said Daleep Singh, chief global economist for PGIM Fixed Income. “We’re in a world in which the shocks are going to keep coming.”

FedEx’s stock plunged Friday, pulling broader financial markets down as well, after the package delivery company’s chief executive, Raj Subramaniam, said he expected a “worldwide recession.”

Central banks, meanwhile, are engaged in the most aggressive campaign of rate increases since the late 1990s, according to Citigroup. This month, central banks in Europe, Canada, Australia and Chile have hiked rates, and the Fed is expected to do so for the fifth time since March at its meeting next week.

Some economists fear that the world’s central bankers are misreading the global economy in their rush to raise rates, just as they did – in the opposite way – last year when they insisted inflation would prove temporary and resisted acting. The cumulative effects of multiple countries tightening credit at the same time could strangle global growth.

“I don’t really get the sense that many or any central banks are paying huge attention to how their policies are affecting the rest of the world,” said Maurice Obstfeld of the University of California at Berkeley, the former chief economist of the International Monetary Fund.

The Fed’s rate hikes are driving the dollar up against other major currencies, which makes imported goods less expensive for Americans, while making it harder for people and businesses in other countries to afford products made outside their borders.

Major oil importers such as Tunisia have been especially hard hit, since crude is priced in dollars. The stronger greenback also hurts developing nations that have large dollar debts. As their local currencies lose value against the dollar, it takes more Turkish lira or Argentine pesos to make debt payments.

Despite raising its benchmark lending rate by two-and-a-half points since March, the Fed has been unable to slow the economy enough to take the pressure off prices. On Thursday, initial jobless claims fell for the fifth straight week, in the latest sign that the labor market remains too hot for the central bank’s comfort.

Though strong hiring is good news for American workers, many economists have said that unemployment will need to increase before inflation cools.

The Labor Department’s report this week that consumer prices in August were 8.3 percent higher than one year ago – little changed from 8.5 percent in July – disappointed investors.

Some analysts expect the Fed to keep hiking beyond the 3.8 percent level that policymakers suggested in June would complete their anti-inflation work. On Friday, economists at Deutsche Bank said the Fed’s benchmark lending rate could hit 5 percent next year – roughly twice the current level.

Wall Street firms such as Oxford Economics this week said the Fed will hit the brakes hard enough to corral prices even if it sends the United States into a brief downturn.

“Higher-for-longer inflation, more aggressive Fed monetary policy tightening and negative spillover effects from a weakening global backdrop will combine to push the U.S. economy into a mild recession,” the firm said in a note to clients.

Since 1981, U.S. and global growth have largely moved in tandem, according to Citigroup research. In each of the four global recessions since 1980, the United States – which accounts for roughly one-quarter of world gross domestic product, or GDP – slowed either right before the global economy fell into a slump or at the same time.

The IMF said this summer that the global economy was in danger of slipping into recession as a result of aftershocks from the war in Ukraine, the pandemic and inflation. The IMF alarm followed a World Bank warning of the risk of global “stagflation,” a toxic combination of persistently high prices and anemic growth.

There is no official definition of a global recession, though the World Bank uses the term to describe a fall in per-person global GDP. Some economists say a broad decline in a number of metrics, such as industrial production, cross-border capital flows, employment and trade, or an economic slump involving a large number of major economies distinguishes a true global recession.

“We have the U.S., Canada and Europe all in recession over the second half of this year and early next year. Whether you call that a global recession or not is in the eye of the beholder,” said Ben May, Oxford Economics’ director of global macro research. “But we are going to go through a very weak patch. It’s going to feel like a recession.”

The big worry is Europe, which is struggling to adjust to the loss of Russian natural gas supplies. Moscow reacted to European sanctions after the invasion of Ukraine by slashing shipments of natural gas to Europe by roughly 75 percent, according to Barclays.

As energy prices soared, consumers and businesses on the continent felt the pinch. After years of holding borrowing costs below zero, the European Central Bank has raised rates twice since July to curb inflation that tops 9 percent – and plans more such moves despite a weakening economy.

“It’s their most dramatic shift in policy since the global financial crisis. The energy supply shock hits them much harder than the U.S.,” said economist Carmen Reinhart of Harvard’s Kennedy School of Government.

Some economists say a broader adjustment is underway. After decades in which global integration kept a lid on price pressures in the United States and other advanced economies, external forces now are fueling inflation.

Governments in the United States, Europe and China are encouraging greater domestic production via subsidies and investment restrictions. Reshaping global supply chains will cost more, as will efforts to speed the transition from fossil fuels to address climate change, said Dana Peterson, chief economist for the Conference Board.

“The days of ultralow inflation are probably over,” she said.

Global economic activity contracted in the second quarter for the first time since the early days of the pandemic in 2020. If that contraction turns into a full-blown recession in the months ahead, traditional fixes will not be available.

With inflation raging near 40-year highs in the United States, Europe, Canada and the United Kingdom, central bankers are intent on raising rates, not lowering them – the customary remedy for low growth.

In 2008, when an imploding housing bubble ignited a global financial crisis, the Chinese government stepped up with a nearly $600 billion wave of infrastructure spending, followed by years of generous financing by state banks. The total rescue amounted to more than one-quarter of China’s gross domestic product, far more than the United States spent on stimulus, according to a study by the Organization for Economic Cooperation and Development in Paris.

The Chinese spending translated into orders for factories in the United States and Europe, copper mines in Peru and iron ore producers in Australia.

Today, China is preoccupied with its own troubles – including a debt-ridden property sector and flagging export growth – ahead of a sensitive Communist Party Congress in October, which is expected to grant Chinese President Xi Jinping an unprecedented third term.

The yuan this year also has fallen almost 9 percent against the dollar and is hovering near the symbolically important level of 7 yuan to the greenback.

“Chinese leaders are more reluctant to use levers they’ve used in the past,” said May. “China is less likely to be the spender of last resort.”