With Rising pricesLabor shortages, war rages in Ukraine, supply chains are faltering, interest rates are now on the cusp of rising, and fears of an imminent recession are everywhere. Except, of course, in the White House – and that’s in complete denial.
Just as it was above inflation.
“Inflation shock” is getting worse, “interest rate shock” is just beginning, and “recession shock” is coming, Michael Hartnett, senior investment analyst at Bank of America said in a note to clients.
Deutsche Bank economists warn: “We expect more aggressive monetary policy tightening to push the economy into recession.”
“The warming of the labor market has significantly increased recession risks,” said Jan Hatzius, chief economist at Goldman Sachs.
Clinton’s Treasury Secretary Larry Summers warned that “a recession in the next two years is more likely than most” — whose warnings about inflation a year ago were not heeded by Biden’s team.
One worrying development: Short-term debt yields have been advancing little by little Long-term debt, which indicates investors’ lack of confidence in the economy in the future.
The main problem: the Fed’s campaign to tame inflation – It now operates at an average rate of 8.5% per annum, the highest since 1981 – by raising interest rates and shrinking its balance sheet, it risks squeezing credit and discouraging investment and growth. After months of claiming that inflation (like the White House) was “temporary,” the Fed is now finally tightening, with a 2bp rate hike expected before the end of the year.
Add to those unresolved issues in the supply chain in the era of a pandemic, Russia’s invasion of Ukraine, President Joe Biden’s energy war And the Democrats’ tax and borrowing agenda – and a recession in a year or two that’s starting to show more than ever.
Economist Tara Sinclair compares slowing price increases without slowing growth to “trying to land during an earthquake.”
In fact, Summers notes that there has never been “a moment in the United States when inflation was above 4[%] Unemployment was less than 4[%]- as now – ‘and we didn’t have a recession for the next two years. ”
But the whole White House is a happy talk. When asked if Biden thinks Summers is right about the recession, as he has been talking about inflation, Jen Psaki of the White House said, “That’s not a prediction we’ve made.” National Economic Council Director Brian Dees claims the administration has “spurred a strong and unique economic recovery” that “puts us uniquely well-positioned to tackle the challenges ahead”.
Sorry: it was Bidens—the war on energy, the Democrats’ spending spree of America’s nearly $2 trillion bailout—that sparked Biden in the first place. Now the same cure pretending to fix his disastrous mistake, even when he sticks to the same path?
Brace yourself for a rocky road ahead.
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