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The Macro Compass Founder & CEO Alfonso Peccatiello and Miller Tabak Managing Director and Equity Strategist Matt Maley join Yahoo Finance Live to discuss U.S. private payrolls data, recession expectations, and the outlook for employers.
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Expect a recession to start in the U.S…late June – mid-summer, says The Macro Compass Founder
As the global economy continues to recover from the devastating impacts of the COVID-19 pandemic, concerns about an impending recession in the United States are on the rise. While many experts and economists remain cautiously optimistic, there are pessimistic voices hinting at a potentially troubled future. One such voice is The Macro Compass Founder, who has recently stated that a recession in the U.S. is likely to begin between late June and mid-summer.
The Macro Compass Founder, known for their accurate predictions and insight into economic trends, has cited several factors that raise concerns about an upcoming recession. These factors include rising inflation, potential interest rate hikes, and the withdrawal of government stimulus packages. Additionally, uncertainties surrounding the global supply chain, labor shortages, and the potential for new COVID-19 variants are also contributing to a sense of economic unease.
One major issue that The Macro Compass Founder highlights is the growing inflationary pressures in the United States. In recent months, there has been a noticeable increase in consumer prices, sparked by supply chain disruptions, rising raw material costs, and increasing demand. If unchecked, sustained inflation could erode people’s purchasing power, leading to a slowdown in consumer spending, which is a key driver of economic growth.
Another concern is the potential for interest rate hikes by the Federal Reserve. Currently, interest rates remain historically low, supporting borrowing and investment. However, if the Federal Reserve decides to raise rates to curb inflation, borrowing costs will increase, potentially stifling economic activity and borrowing-dependent sectors such as housing and consumer goods.
Moreover, the withdrawal of government stimulus packages, which have played a crucial role in supporting individuals and businesses throughout the pandemic, could also impact the economy. As these safety nets are gradually phased out, there might be a decline in spending, especially among vulnerable and low-income households, contributing to further economic challenges.
Uncertainties in the global supply chain also pose a threat to economic stability. The pandemic exposed fragilities and vulnerabilities in supply chains worldwide, leading to disruptions in industries such as manufacturing and logistics. Persistent disruptions and delays could hamper productivity, leading to reduced output and economic slowdown.
Labor shortages are another contributing factor to the potential recession. Many industries are struggling to find workers, leading to bottlenecks in production and hindered expansion. The scarcity of workers could result in wage pressures, which, if not managed properly, could further fuel inflationary pressures.
Lastly, the potential for new COVID-19 variants poses a significant risk to the economy. The emergence of highly contagious variants could result in new waves of infections, prompting governments to reinstate lockdown measures. These restrictions would negatively impact various sectors, such as travel, hospitality, and entertainment, hindering economic recovery and potentially pushing the country into a recession.
While The Macro Compass Founder’s predictions should not be taken as an absolute certainty, their analysis raises important points of concern. It is essential for policymakers, businesses, and individuals to be aware of these potential risks and take proactive measures to mitigate their impact. Implementing sustainable fiscal and monetary policies, addressing supply chain vulnerabilities, and investing in job creation and reskilling programs are some of the steps that can help build economic resilience and navigate through potentially challenging times.
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