Are the months ahead going to be very painful for our economy? This is something that I have been arguing for a long time, and apparently the vast majority of corporate CEOs now agree with me. Of course economic conditions are not exactly good at this moment. Core U.S. inflation just rose to a 40 year high, mortgage rates just hit the highest level in more than two decades, home values are plummeting all over the nation, and retail sales in the United States unexpectedly fell in September. If you think that the U.S. economy is performing well right now, there is a very large bridge on the west coast that I would like to sell you. Unfortunately, it appears that economic conditions are about to get significantly worse. In fact, one recent survey found that 98 percent of corporate CEOs are planning “for a U.S. recession over the next year or year and a half”…
Nearly all CEOs are readying for the U.S. economy to fall into a recession, according to a survey released Thursday by The Conference Board.
The survey, The Conference Board Measure of CEO Confidence, found that 98% of CEOs indicated they were preparing for a U.S. recession over the next year or year and a half. That figure is five percentage points higher than in the third-quarter survey.
Talk about a consensus.
But why is the number only 98 percent?
What are the other 2 percent thinking?
This week we also learned that a model created by Bloomberg economists is now forecasting a 100 percent chance of a recession within the next 12 months…
A U.S. recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms.
The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update.
Of course it is pretty easy to forecast a recession when we are already in one.
But I don’t want to let that detail detract from the point that I am trying to make.
The point that I am trying to make is that the business community is bracing for things to get really bad in the months ahead.
And there are some sectors of the economy where things are already falling apart at a frightening pace.
For example, home prices are now being slashed “at a record clip”…
Home sellers are slashing their asking prices at a record clip as surging mortgage rates drive a downturn in the US housing market, according to a recent report from real estate firm Redfin.
About 7.9% of home listings reported price drops during the four-week period ending Oct. 9, according to a rolling average compiled by Redfin. That figure marked a record high and a significant uptick compared to the same period last year, when just 4% of listings reported price cuts.
A new housing crash is here.
And just like we witnessed in 2008, it is going to cause immense pain for Wall Street.
Sadly, there is a lot of pain on Main Street as well.
Every single day, more Americans are falling out of the middle class and into poverty. As a result, our homeless population is absolutely exploding.
If you can believe it, the New York Post is reporting that there are approximately 120 tent cities in Washington D.C. right now…
In the past two years, homeless encampments have exploded in Washington D.C., as both the city and federal governments lifted enforcement measures during the COVID-19 pandemic — and made it a no-brainer for itinerants to lay down roots by providing for their every need.
A tour by The Post of the district’s major tourist areas this week found at least 35 vagrants in residence at a National Park Service site two blocks from the White House; more than 20 in the green spaces surrounding the State Department complex; and five across the street from the infamous Watergate Hotel.
And these sites accounted for less than 5 percent of the estimated 120 tent cities in Washington D.C.
If things are this bad already, what will our major cities look like once economic conditions really start to spiral out of control?
Unfortunately, the man in the White House is in an advanced state of mental decline, and he is in complete denial about what is happening…
The comment came during a conversation with a reporter at a Baskin Robbins in Portland, Oregon, who asked the president if he had any worry about the strength of the U.S. dollar amid rising inflation.
With a chocolate chip ice cream cone in his hand, Biden answered: “I’m not concerned about the strength of the dollar. I’m concerned about the rest of the world. Our economy is strong as hell.”
Our economy is “strong as hell”?
I understand that he is trying to help Democrats do well in November, but nobody is going to believe such a delusional statement.
At this moment, the U.S. economy is in the worst shape that it has been since 2008, and the Federal Reserve seems determined to push us over the edge by raising interest rates even more.
In fact, James Bullard says that the Fed may raise rates by 75 basis points in both November and December…
Federal Reserve Bank of St. Louis President James Bullard left open the possibility that the central bank would raise interest rates by 75 basis points at each of its next two meetings in November and December, while saying it was too soon to make that call.
The Fed hiked rates by 75 basis points for the third straight meeting last month, to a target range of 3% to 3.25%. Officials projected 125 basis points of tightening for the rest of the year, suggesting a 75 basis-point move in November and 50 basis points in December. A further 25 basis points of tightening was penciled in for 2023, according to their median estimate.
It would be absolutely suicidal to raise rates by 75 basis points in each of the next two months.
But I think that the Fed might do it anyway.
In any event, the “Great American Economic Meltdown” that so many of us have been waiting for is here, and that is going to mean a tremendous amount of pain for all of us in 2023 and beyond.
In 2008, the Fed was able to contain the bleeding by pushing interest rates all the way to the floor and by pumping massive amounts of fresh money into the financial system.
This time around the Fed isn’t going to be able to make such dramatic moves because they are scared to death of inflation.
We really are facing a nightmare scenario, and virtually every CEO in America realizes that tough times are ahead.
Things could have turned out very differently if our leaders had made better decisions in the years leading up to this crisis.
But that didn’t happen, and so now we all get to suffer as a result.
Article posted with permission from Michael Snyder
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