Higher prices are not "transitory," as some Fed officials say. They are a result of deep economic problems and signal something dangerous…
An economic slowdown.
More drastically, a potential recession.
Just several days ago, the Bloomberg recession probability forecast jumped from 20% to 25%.
In the happy days of post-pandemic recovery, this indicator hovered around 10%. It has more than doubled since then.
The last time it was at this level was February 2020… and we know what happened next.
But we wouldn't rely on just one indicator to tell us where the economy is headed.
Joe Biden's top economic adviser said the country could face "difficulties" ahead, citing high inflation and supply chain issues.
Bloomberg Economics says that inflation in both the U.S. and the eurozone will likely stay above 8% in the coming months.
In other words, inflation might continue running at 40-year highs.
And this forecast could be conservative.
For instance, Bank of America announced in a note to clients that the "inflation shock" is worsening and a "recession shock is coming."
Even in China, expectations are low. The country's Premier Li Keqiang issued his third warning this week about risks related to economic growth.
All in all, the world is facing a challenging year. As an investor, you should prepare for a possible recession.
No comments:
Post a Comment