Stagflation, massive underemployment, unaffordable housing, 30 trillion dollars of debt, out-of-control deficit spending, stagnant wages, wrecked trade relationships. And they wonder why people fear recession or stagflation will hit the US.
BLANKS ISSUE BLEAK WARNINGS
As the Federal Reserve tightens monetary policy to attempt to surge inflation, Bank of America (BofA) warned on Friday that the US faces a recession next year.
“Inflation shock worsening, rates shock just beginning, recession shock coming,” BofA’s chief investment strategist, Michael Hartnett, wrote in a weekly note to clients, seen by Reuters. He added that in this context, cash, volatility, commodities, and cryptocurrencies could outperform bonds and stocks.
JPMorgan’s chief executive, Jamie Dimon, said this week in his annual letter to shareholders that the combination of inflation, the conflict in Ukraine, and sanctions against Russia may “dramatically increase risks ahead” for the US.
Dimon warns of unpredictable consequences for the nation’s economy.
Dems ignored Larry Summers warnings that their $2T spending spree cld result in inflation “not seen in a generation” Now according to Summers interest rate hikes necessary 2control inflation risks leading to “stagflation..&ultimately a major recession” thx 2 Biden fiscal insanity.
~ Chuck Grassley tweet
THE FEDS STEP IN
On Wednesday, the Federal Reserve stated that it plans to reduce its balance sheet. Investors expect the regulator to hike its key interest rate by 50 basis points at its next meeting in early May.
The inflation rate for February was 7.9%, although its actually higher if the US used the same standard used in the 1980s. March is expected to be higher. In order to use interest rates to curb inflation, the Feds would have to raise the rates higher than the inflation rate. That would kill the economy.
The Feds are talking aren’t talking about raising the rates anywhere high enough. They can’t.
Peter Schiff said the rate hikes won’t do a thing, Zero Hedge reports:
Their inconsequential, tiny rate hikes are going to do anything. In fact, the only reason they’re raising rates at all is to pretend they can keep on doing it. But at some point, they will reverse course because the bond market has that right. These higher rates are going to cause a recession, and it’s not going to take that many hikes to push the economy into recession given how addicted the economy is and how overleveraged the economy is. So, once the impact on the economy and on the financial markets is felt, then the Fed is going to give up all the tough talk and inflation is going to continue to get worse.
Fox Business reports The Economist Intelligence Unit stated the “outlook for the US economy is looking bleaker.”
“The economic fallout from the war and other external factors, such as the emergence of a new coronavirus variant (which remains our baseline scenario), expose the U.S. to the growing risk of stagflation – low growth combined with high inflation,” according to one analyst.
Stagflation is the combination of economic stagnation and high inflation, characterized by soaring consumer prices as well as high unemployment.
Stagflation savaged the economy from the 1970s to about 1982.
The rising price of oil is also pushing inflation but the Biden team will not take the jackboot off the oil, gas, and coal industry.