A recession is absolutely already in the US, just like in China and Europe. There are a few indicators that the Fed might look at that might sway them from their current course of action (75 Basis points in July)... but they'll think that they need to kill inflation completely dead and stomp on its carcass to ensure wage inflation doesn't happen... and most likely cause a bunch of deflation in the process.
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The wage spiral is already off the table. This is not going to happen. We are already seeing wages lagging the PCI. At the same time, unemployment is drifting up albeit slowly.
Official announcements of recession are always in hindsight so you are right, we can be in one even though they are not called that.
I expect the retailer to start discounting (I am sure they are already) the excess inventory they have.
Of course, once the inventory is cleared out, there is where the next wave of supply chain issues come from.
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Totally agree. Retailers won't just have excess inventory to deal with... all this talk of recession has consumers trying to save (just in case they lose their jobs) so Target, WalMart, etc might all have to out-discount each other to entice people with too-good-to-pass-up deals... while people are just trying to afford to eat and drive to work.
But... is the Fed going to be smart enough to hold off raising rates in July... the market doesn't think so...
No chance of that. We are going to see them raise without a second thought.
The latest PCE numbers give them the cover they need.
To me, the question is Sept. I give them a 50/50 chance at a raise then. Even if they do, I see then turning real dovish by the end of the year.
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Yup, even Atlanta Fed already signaling one. We done been in it already.