Legendary economist Dr. Lacy Hunt joins Julia La Roche on episode 115 for a wide-ranging discussion on the economy and why we’re facing an impending recession.

Dr. Hunt is an internationally known and award-winning economist.He received the Abramson Award from the National Association for Business Economics for “outstanding contributions in the field of business economics.”

Dr. Hunt is Executive Vice President and Chief Economist of Hoisington Investment Management Company (HIMCO), a firm that manages over $5 billion for pension funds, endowments, insurance companies and others.

This is the 54th year in Dr. Hunt’s career. He served as a Senior Economist for the Federal Reserve Bank of Dallas. When he entered the Fed, William Martin was chair and was grappling with severe inflation and when Dr. Hunt left the Fed, Arthur Burns was chair and also trying to contain rampant price increases.

Dr. Hunt served 23 years on the Board of Trustees at Temple University where he received his PhD in 1969, and is an honorary life trustee as well.

0:00 Welcome Dr. Hunt
1:55 Macro picture
3:00 Corollary between severity of inflation and recession
4:50 An untenable situation for moderate/modest households
6:29 Looking under the hood of the economy
9:50 Michigan consumer sentiment index
11:55 Coordinated fiscal and monetary response to the pandemic
14:20 Law of diminishing returns
17:03 What does a hard landing look like
20:30 Another contra cyclical development in the financial cycle
23:00 A deep/short recession or long/narrow recession
26:00 Debt, demographics
29:40 US dollar
30:40 Private spending has a positive multiplier, government spending has a negative multiplier
36:06 Other Deposit Liabilities (ODL)
41:55 Contra normal developments
43:15 Discretionary monetary, fiscal policy have failed
48:30 Fed needs to move away from full discretion
50:20 Groupthink at the Fed, no diversity of opinion
54:00 Classical economist
57:00 5 phases of the business cycle

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The Impending Recession With Dr. Lacy Hunt

As concerns ripple through global markets, there is growing speculation about an impending recession. Dr. Lacy Hunt, an influential economist, has been vocal about the signs pointing towards an economic downturn. With his extensive knowledge and experience in the field, Dr. Hunt paints a worrisome picture of the future.

Dr. Hunt, the executive vice president of Hoisington Investment Management Company, has an impressive track record of accurately predicting economic trends. Known for his expertise in monetary policy and interest rates, his insights are highly valued in both academia and the investment industry.

According to Dr. Hunt, several key factors are contributing to the possibility of an economic recession. He highlights the high level of debt, both at the governmental and individual levels, as a major concern. With interest rates already historically low, the effectiveness of monetary policy to stimulate the economy is diminishing. Dr. Hunt warns that additional debt will only lead to further economic stagnation.

Furthermore, he emphasizes that the ongoing trade war between the United States and China is exacerbating these concerns. The threat of escalating tariffs and geopolitical tensions have already impacted economic growth worldwide. Dr. Hunt firmly believes that the trade war will have long-lasting negative consequences, significantly contributing to the potential recession.

In addition, Dr. Hunt points out the impotence of fiscal stimulus measures as a reason for worry. With limited room for maneuvering due to already high levels of debt, governments may struggle to counteract an economic downturn. This lack of potential fiscal response further compounds the challenges faced by central banks in managing the economy.

Dr. Hunt’s warnings are not just confined to the United States. He argues that the whole world is facing a synchronized slowdown, with economies such as Germany and China already experiencing contractions. This global interconnectedness will undoubtedly impact the United States and create a domino effect on the global economy.

His analysis is not limited to the negative repercussions of these factors. Dr. Hunt also provides insight into potential solutions to avoid or minimize the impact of a recession. He emphasizes the need for comprehensive reforms, including reducing excessive regulations, improving productivity, and addressing income inequality. By implementing these reforms, governments can lay the groundwork for a more sustainable economy and mitigate the severity of an impending recession.

It is crucial to note that Dr. Hunt’s predictions are not infallible, as the future is inherently uncertain. However, given his track record and in-depth understanding of the factors at play, his views certainly warrant consideration. The global economy stands at a crossroads, and the insights of experienced economists like Dr. Lacy Hunt can help guide both policymakers and investors towards informed decisions during these uncertain times.