Despite efforts to maintain positivity regarding the economy, signs indicate that the United States is headed towards a recession this year.
Noted investor Michael Burry believes that inflation in the US has peaked and may not decrease until the Federal Reserve takes direct action, a move that might only happen once the economy is firmly in a recession.
“Inflation peaked. But it is not the last peak of this cycle. We are likely to see the consumer price index lower, possibly negative in 2H 2023, and the US in recession by any definition,” Burry tweeted on Sunday. “The Fed will cut rates and the government will provide stimulus. This will lead to another inflation spike. It’s not difficult to predict.”
While the outlook is dimming, some analysts remain cautiously optimistic that the recession may not be as severe as anticipated.
Recession will hit a third of the world this year, IMF chief warns https://t.co/Qd5tpF86sv
— Financial Times (@FinancialTimes) January 1, 2023
“It’s not a certainty,” stated Bank of America Chief Economist Michael Gapen to CBS. “We may be able to avert it, but many in my position foresee a challenging year for the US in 2023.”
Gapen added, “This doesn’t necessarily have to be severe or prolonged. We just need to scale back an economy that has rebounded strongly from the pandemic but brought about excessive inflation.”
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