Former Federal Reserve Chairman Alan GreenspAmericans have warned that recession is the “most likely outcome,” as the central bank continues to tighten monetary policy to fight inflation.
Former New York Federal Reserve Chairman William Dudley reinforced Greenspan’s claims, saying that a US recession is “likely” because the Fed’s rate hikes lead to a recession.
Fed officials expect to keep interest rates high for some time, minutes show
Wealth and Investment Management chief investment officer Daryl Cronk reacted Wednesday to former Fed officials’ grim forecasts for 2023, with FOX Business guest “Making Money” Lauren Simonetti saying he agrees that Recession is the ‘likely outcome’ to the weak US economy.
“I tend to agree more with Alan Greenspan that[recession]is probably the likely outcome,” Cronk said Wednesday.
“And remember, it’s not just a matter of raising or lowering interest rates. It’s a combination of money, supply is shrinking, and a strong US dollar is depressing financial conditions. Bank reserves are running out. So there’s a whole host of myriad other elements that are also conspiring to tighten. simultaneously,” Kronk explained “Making Money With Charles Payne”.
On the other hand, he refuted Dudley’s argument that rate hikes by the Federal Reserve are what causes a recession, stating that he does not believe that exponential increases are solely responsible. While Kronk noted that the Fed’s involvement is a “great point,” he said he would have to take “a little bit” of the other side of the argument into consideration.
“I’m not sure that just cutting prices will do the trick [avoid a recession]. There is the lag effect that we are all familiar with in monetary policy. So it’s typically 6 to 9 months, which means, if you use that as the lag effect, we’re now only feeling 75 basis points for June and maybe 75 basis points in July,” Kronk explained.
The United States is headed for another recession and inflation in 2023, said famous investor Michael Bury
He added, “We still feel like 75 in September, 75 in November and 50 in December, whatever else we do here in 2023. So that will impact the first half of 2023.”
Kron went on to say that consumers will experience a Two-sided coin in 2023 — with the first half of the year being particularly difficult — but he said the second half is likely to see improvements.
“Tired of the first half, he warned, I think you’ll have a strong rise in the second half, because there’s a lot of pain that you haven’t felt yet.”
“I mean, you know, everyone wants inflation to go down to two or two and a half percent, including Fed Chairman Powell. But it’s a lot of pain to go from 6.7 on the CPI, 6.7 down to 2.0 in between here. And there, Kronk concluded.