Federal Reserve Board Chairman Jerome Powell speaks during a news conference after the attending the Board's two-day meeting, on July 31, 2019 in Washington, DC. Powell announced that the Fed agreed to cut interest rates by a quarter of a point, which is the first rate cut since 2008.
Mark Wilson/Getty Images
Federal Reserve Board Chairman Jerome Powell speaks during a news conference after the attending the Board's two-day meeting, on July 31, 2019 in Washington, DC. Powell announced that the Fed agreed to cut interest rates by a quarter of a point, which is the first rate cut since 2008.
Now playing
00:52
Federal Reserve cuts interest rates again
CNN
Now playing
03:22
Bank of America CEO reveals his top worry about the economy
A 'we are hiring sign' in front of the Buya restaurant on March 05, 2021 in Miami, Florida. The restaurant is looking to hire more workers as the U.S. unemployment rate drops to 6.2 percent, as many restaurants and bars reopen. Officials credit the job growth to declining new COVID-19 cases and broadening vaccine immunization that has helped more businesses reopen with greater capacity. (Photo by Joe Raedle/Getty Images)
Joe Raedle/Getty Images
A 'we are hiring sign' in front of the Buya restaurant on March 05, 2021 in Miami, Florida. The restaurant is looking to hire more workers as the U.S. unemployment rate drops to 6.2 percent, as many restaurants and bars reopen. Officials credit the job growth to declining new COVID-19 cases and broadening vaccine immunization that has helped more businesses reopen with greater capacity. (Photo by Joe Raedle/Getty Images)
Now playing
01:27
Jobs and retail data show positive signs for the economy
Now playing
03:21
Teachers under pandemic stress are quitting: I didn't feel safe
Barbers from King's Cutz give haircuts indoors while observing COVID-19 safety restrictions on March 13, 2021 in Los Angeles, California.
Mario Tama/Getty Images
Barbers from King's Cutz give haircuts indoors while observing COVID-19 safety restrictions on March 13, 2021 in Los Angeles, California.
Now playing
01:43
US consumer prices increased in March
WASHINGTON, DC - DECEMBER 01: Chairman of the Federal Reserve Jerome Powell testifies during a Senate Banking Committee hearing about the quarterly CARES Act report on Capitol Hill December 1, 2020 in Washington, DC.  Treasury Secretary Steven Mnuchin also testified at the hearing. (Photo by Susan Walsh-Pool/Getty Images)
Susan Walsh/Pool/Getty Images
WASHINGTON, DC - DECEMBER 01: Chairman of the Federal Reserve Jerome Powell testifies during a Senate Banking Committee hearing about the quarterly CARES Act report on Capitol Hill December 1, 2020 in Washington, DC. Treasury Secretary Steven Mnuchin also testified at the hearing. (Photo by Susan Walsh-Pool/Getty Images)
Now playing
02:06
Fed chief: The economy is about to grow more quickly
marketplace africa nigeria cotton exports farmers spc_00002226.png
marketplace africa nigeria cotton exports farmers spc_00002226.png
Now playing
04:57
How international demand for Nigerian cotton is suiting well for small farmers
marketplace africa fintech flutterwave valuation african innovation spc_00040411.png
marketplace africa fintech flutterwave valuation african innovation spc_00040411.png
Now playing
04:49
How Flutterwave's unicorn status could sprout more innovation in African fintech
Motor vehicle traffic moves along the Interstate 76 highway in Philadelphia, Wednesday, March 31, 2021. Looking beyond the $1.9 trillion COVID relief bill, President Joe Biden and lawmakers are laying the groundwork for another of his top legislative priorities — a long-sought boost to the nation's roads, bridges and other infrastructure that could meet GOP resistance to a hefty price tag. (AP Photo/Matt Rourke)
Matt Rourke/AP
Motor vehicle traffic moves along the Interstate 76 highway in Philadelphia, Wednesday, March 31, 2021. Looking beyond the $1.9 trillion COVID relief bill, President Joe Biden and lawmakers are laying the groundwork for another of his top legislative priorities — a long-sought boost to the nation's roads, bridges and other infrastructure that could meet GOP resistance to a hefty price tag. (AP Photo/Matt Rourke)
Now playing
00:49
Levi's CEO on corporate tax: 28% pushes the threshold
Now playing
03:01
A return to the office brings 'some anxieties, some anticipation'
Traffic flows past the Main Street Train Station on the Interstate 95 bridge through downtown Richmond, Va., Wednesday, March 31, 2021.  Looking beyond the $1.9 trillion COVID relief bill, President Joe Biden and lawmakers are laying the groundwork for another of his top legislative priorities — a long-sought boost to the nation's roads, bridges and other infrastructure that could meet GOP resistance to a hefty price tag. (AP Photo/Steve Helber)
Steve Helber/AP
Traffic flows past the Main Street Train Station on the Interstate 95 bridge through downtown Richmond, Va., Wednesday, March 31, 2021. Looking beyond the $1.9 trillion COVID relief bill, President Joe Biden and lawmakers are laying the groundwork for another of his top legislative priorities — a long-sought boost to the nation's roads, bridges and other infrastructure that could meet GOP resistance to a hefty price tag. (AP Photo/Steve Helber)
Now playing
01:31
Lyft co-founder: Higher corporate tax to fund infrastructure 'makes sense'
People shop in the historic Charleston City Market, South Carolina on April 4, 2021 amid the Covid-19 pandemic. (Photo by Daniel SLIM / AFP) (Photo by DANIEL SLIM/AFP via Getty Images)
DANIEL SLIM/AFP/Getty Images
People shop in the historic Charleston City Market, South Carolina on April 4, 2021 amid the Covid-19 pandemic. (Photo by Daniel SLIM / AFP) (Photo by DANIEL SLIM/AFP via Getty Images)
Now playing
03:08
IMF upgrades 2021 economic outlook
Construction workers build the "Signature Bridge," replacing and improving a busy highway intersection at I-95 and I-395 on March 17, 2021 in Miami, Florida. The Florida Department of Transportation is building the project in partnership with the Miami-Dade Expressway Authority and its contractor, the Archer Western-de Moya Group Joint Venture. The infrastructure project will ease traffic congestion, connect communities with downtown neighborhoods, and provide an iconic bridge for Miami's skyline. The entire project is scheduled for completion in the fall of 2024 at the cost of $818 million. (Photo by Joe Raedle/Getty Images)
Joe Raedle/Getty Images
Construction workers build the "Signature Bridge," replacing and improving a busy highway intersection at I-95 and I-395 on March 17, 2021 in Miami, Florida. The Florida Department of Transportation is building the project in partnership with the Miami-Dade Expressway Authority and its contractor, the Archer Western-de Moya Group Joint Venture. The infrastructure project will ease traffic congestion, connect communities with downtown neighborhoods, and provide an iconic bridge for Miami's skyline. The entire project is scheduled for completion in the fall of 2024 at the cost of $818 million. (Photo by Joe Raedle/Getty Images)
Now playing
01:47
US economy added 916,000 jobs in March
Resturant Yurkevcih Pkg 1
CNN
Resturant Yurkevcih Pkg 1
Now playing
02:55
Restaurants are still struggling, but see hope on the horizon
Now playing
03:41
Fed's James Bullard: We'll let inflation run above target for some time
Now playing
03:38
Stimulus package aims to get mothers back to work

Editor’s Note: Sven Henrich is founder and lead market strategist at NorthmanTrader. The opinions expressed in this commentary are his own.

Federal Reserve Chairman Jerome Powell is having a Ben Bernanke moment. He is trying to maintain confidence by insisting there is no risk of a recession, yet he’s pursuing a policy of rate cuts at the same time.

Recall that, in 2007, former Fed Chair Bernanke was pursuing a similar path. He cut rates in September and told Congress in November that while the US economy was indeed facing some risks, it did not appear headed for a recession. Yet, just a month later, the US economy did just that and fell into the Great Recession.

The current Fed has cut rates twice so far this year. Powell and the Fed have been chasing deteriorating conditions just as Ben Bernanke did in 2007. In doing so, Powell appears to be fighting to avert the inevitable: The US economy is eventually headed for a recession.

Economic growth is slowing

Real GDP growth has been slowing markedly in 2019 versus 2018. Q2 GDP came in at 2% this year versus 3.5% in Q2 2018. And, according to the New York Fed’s Nowcast model, Q3 is currently projected at 1.5% versus 2.9% in Q3 2018 and Q4 is expected to be even lower at 1.1%. While these projections will likely change, the trend shows slowing growth versus last year – a trend similar to what the Fed was facing in 2007.

The job market is slowing

In 2019, average monthly jobs growth has slowed to 158,000 jobs added versus 223,000 in 2018. While the unemployment rate remains at a low of 3.7%, slowing jobs growth signals that economic expansion is ending. Given continued trade war uncertainty, and slowing global economic growth, global employers have been slowing the pace of hiring and reducing weekly work hours. After jobs growth peaked in 2006, 2007 saw similar slowing in global employment.

Yield curve inversions

While Powell insists he’s not expecting a recession, the Fed’s own yield curve inversion model is sending a different message. The inversion of the 10-year bond rate versus the 3-month Treasury bill has preceded each of the last 7 recessions. The recent reversal in bonds have sent yield curves on a steeper path, a sign of increased recession risk. Yield curves were inverted for several months in 2007, then reverted and began to steepen in the fall before the recession hit.

Falling consumer confidence

US consumer confidence, while still high, has fallen from summer highs. As manufacturing has slowed dramatically, getting consumers to continue to spend confidently is a must for the economy in order to prevent it from falling into a recession. For now consumers are still spending, but cracks are appearing.

Consumers that are concerned about a coming recession may end up reducing their spending in anticipation. Another concern on that front: Consumers are increasingly relying on credit cards to finance their spending, adding more than $20 billion in credit card debt in the second quarter alone. While overall interest rates are low, credit card interest rates have soared to 15.3% – the highest in almost 20 years – and with over $1 trillion in credit card balances, rising interest payments are hitting consumers’ disposable pocketbooks which begs the question: How strong and confident is the consumer really? Lose the consumer, lose the economy.

The Fed, under Bernanke, dealt with similar conditions in 2007. While consumer confidence reached a near high for the cycle in January of 2007, it started declining by the end of the year and helped precipitate the recession. Any further deterioration in consumer confidence would spell trouble for the economy.

Inflation rising?

The Fed has been chasing a self-imposed 2% inflation target for 10 years. Previous low rate policies have failed to reach that goal. But inflation may now already be on the rise – just as it was in 2007 – making rate cuts possibly the wrong policy. In August, consumer core inflation rose the most in over a year.

By cutting rates, the Fed is letting the economy run hot, and as inflation rises, real disposable income shrinks and consumer spending diminishes. Rising inflation may eventually force the Fed to raise rates again.

Just because Powell says he’s not forecasting a recession does not mean a recession isn’t coming. While no set of circumstances are alike, he is facing some of the very same macro ingredients that set the US economy on the path toward a recession in 2007: a business cycle funded by debt expansion, slowing economic growth, slowing employment growth, yield curve inversions and weakening consumer confidence.

The Fed’s own recession models show a sizable recession risk of 38%. CFO optimism has also dropped significantly with 67% expecting a recession by the end of 2020.

With an increasing number of Americans believing recession risk is real into next year, Powell needs to shore up confidence among consumers and the markets. That may be difficult. This week’s Fed vote showed great division within the Fed over the most recent rate cut.

Though Powell is facing similar macroeconomic issues to Bernanke, he has a unique problem: he has the least amount of ammunition of any Fed chair in history to combat a downturn. Bernanke could cut rates from 5% to 0% to heat up the economy. Powell can only lower rates by 1.75% before hitting zero. The Fed needs new tools. Powell can’t solely rely on Bernanke’s rate-cutting playbook. He must forge is own path.