[BrianC]

Deutsche Bank Predicts the US Will Tumble Into Recession in 2023 as the Fed Hikes Interest Rates Hard
Deutsche Bank has said it expects the US economy to fall into a recession in late 2023 as the Federal Reserve raises interest rates sharply, becoming the first major lender to make such a prediction. From a report:
The bank's analysts, including chief US economist Matthew Luzzetti, said the Fed has historically triggered recessions when it hikes rates to deal with strong inflation. "A mild recession will be needed to take sufficient steam out of the economy and labor market to bring inflation back down," they wrote in a major report on the global economy, released Wednesday.

Inflation has soared to a 40-year high in the US as demand has rebounded from coronavirus lockdowns, aided by government stimulus, but supply chains have remained snarled. The Fed has already raised interest rates by 25 basis points as it tries to cool borrowing and spending. But analysts say the hiking cycle has a long way to go, raising fears about economic growth. Deutsche expects the Fed to raise the federal funds rate by 50 basis points at each of the next three meetings, and thinks the rate will go above 3.5% next year. They said the Fed has only avoided inducing a recession when raising interest rates that hard on two occasions. On all other occasions, significant Fed rate hikes were followed within a year or two by recessions, they said.
https://news.slashdot.org/story/22/04/0 ... rates-hard

[Plantagenet]

I think its possible the US will go into recession even earlier...like later this year.

After all, creating a recession is the implicit goal of the new FED policy of raising interest rates. Its pretty clear what the problem is here---- the FED and the Biden administration screwed up the economy by pushing waaaaaay too much money out the door in 2021....resulting in massive inflation . And then the FED and the Biden administration delayed acting on inflation by making absurd claims that it was "transitory" and that inflation only affected "wealthy people".

Those two policy errors are going to be tough to fix.....so now the Biden administration and the FED are going to have to put the brakes on and raise interest rates until the US goes into recession. At this point the only way to stop inflation is to collapse the economy.

Its just another big screw-up by Joe Biden.


First Joe Biden triggered off inflation....and now he's gonna trigger off a recession to fix the inflation ......

Cheers!

[evilgenius]

Yeah, I am old enough to have seen a few labor markets like this one. Every single time the Fed came in with high interest rates, and crushed labor. Labor, the condition of the labor market, is, maybe, the chief view upon which the Fed looks upon the world. People who are seeking to know where income inequality comes from, need to look there, into the mind of the Chicago School, and the ideas of Milton Friedman. He was Mr. "there is no such thing as a free lunch." He didn't get too much into the importance of marketing, in his expositions, though. Friedman wasn't all wrong, but he wasn't all right either.

Because Fed policy does operate independently of whomever is at the helm of the country, who is president. It operates according to prevailing monetary theory. It often operates so cyclically, counter to political cycles, that it does influence which side gets into office. Politics, in fact, offers a good foil, to deflect our attention from dealing with how far behind the democratic curve monetary policy really is. How we lack the necessary tools, therefore, for iterative action, at the stage where recessions seem like the only choice.

[evilgenius]

Because, otherwise, you would expect to see a more highly paid labor force actually constrain their spending rather than complain about how their newly found powerbase of higher wages still doesn't keep up. It is to expect people to spend, or be more thrifty, in unison.

Without making choices, value judgments, you can't achieve that level of cohesiveness. There does not exist a set of beliefs, except for class descriptions like "working class" that can adapt so easily to such a changing scenario. But the Achilles heel of the working class argument are all of those non-identifying characteristics, like personal beliefs about abortion, that transcend, or vote against our class interest in the markets. We are definitely not "all in this together." We can, and often are, divided.

Still, I would give an ordinary man, with an AI boost, more than a snowball's chance, which may be enough, when it comes to investing, and replacing work with investment. I would especially give him that, in a world where investment had become, for him, as important as sports.

[evilgenius]

Because, otherwise, you would expect to see a more highly paid labor force actually constrain their spending rather than complain about how their newly found powerbase of higher wages still doesn't keep up. It is to expect people to spend, or be more thrifty, in unison.

Without making choices, value judgments, you can't achieve that level of cohesiveness. There does not exist a set of beliefs, except for class descriptions like "working class" that can adapt so easily to such a changing scenario.

But the Achilles heel of the working class argument are all of those non-identifying characteristics, like personal beliefs about abortion, that transcend, or vote against our class interest in the markets. We are definitely not "all in this together." We can, and often are, divided.

Still, I would give an ordinary man, with an AI boost, more than a snowball's chance, which may be enough, when it comes to investing, and replacing work with investment. I would especially give him that, in a world where investment had become, for him, as important as sports.

I add things. Sometimes I do it late enough that I think, maybe, I shouldn't.