Great News! Yellen Says No Sign of Recession, Krugman Says Economy Will Shrink

Hip, Hip Hooray! Perhaps the recession has left town, according to Janet Yellen, who sees solid growth and a strong labor market as positive signs the Fed's efforts to fight inflation are not hurting the economy significantly. I guess she doesn't drive, fill up her car, eat food, or buy groceries. 

Janet Yellen said she doesn’t see signs of a recession, but Nobel laureate Paul Krugman argues the worst is yet to come | Fortune 

But the good news is Paul Krugman speaking up in disagreement with the Treasury Secretary. Krugman sees an upcoming downturn: "While this report made all the people who screamed 'recession!' look as foolish and partisan as they were, it was not, if you look under the hood, a sign that the worst is over," Fortunately the Krugman prediction phenomenon can be put into play here. He does not get it right everytime, or some say, even most of the time. So, in fact, he may be in agreement with Yellen, using some obscure prediction logic analysis. Be keep in mind, past performance does not indicate future performance.

The Daily Caller has categorized the Krugman prediction phenomenon. Here Are Paul Krugman’s Worst Predictions Ever–They’re Really Bad | The Daily Caller

Will Sanity Return To Federal Reserve Policy? Maybe!

Market pressure may just be the cause for a pause.  

Speculation abounds about Federal Reserve Policy for interest rate increases. Every expert seems to have a different take on forecasting what the Fed will do to combat inflation. And unlike the Supreme Court, there are no leaks, only published vague hints.

So, is there hope for some sane monetary policy? We may have reason to hope.

Fundstrat has an opinion: The Federal Reserve is starting to realize that inflation is a smaller "black hole of pain" than previously thought, and a pivot or pause on rate hikes could lead stocks to rally more than 16% by the end of the year, according to Fundstrat's head of research Tom Lee.

Read more here for this positive upbeat prediction: The Fed is realizing that inflation is a smaller 'black hole of pain' than previously thought, and stocks could rally 16% by year-end, Fundstrat says (yahoo.com)

Recession Alert! Bloomberg Calls It 100% Certain! Prepare!

Bloomberg has predicted the absolute certainty of a US economic recession in 2023, most likely before October. The economic model may mean the Federal Reserve has gone too far in raising interest rates in their thus far futile attempts to constrain inflation.

No model is certain, just an educated guess disguised as a mathematical projection by experts. Have faith, these experts are not always right. But this one seems pretty dire any way you look at it, especially when we have a flock of other experts parroting similar outlooks. 

Your best bet? Beware and Prepare! The next Fed meeting November 1-2 may give us some direction. 

The stock market is highly volatile right now. Be careful! Watch for a 'risk-off' flight to quality. And CD's are becoming more and more attractive for safety and income. 

Bloomberg: https://www.msn.com/en-us/money/markets/forecast-for-us-recession-within-year-hits-100-in-blow-to-biden/ar-AA133nzh

But be sure of one thing, when the rate hikes stop, there will be a few months of wait and see, then we might just see one great stock buying opportunity.

Can the Fed Deliver a Soft Landing? Maybe!

The Fed has a chance to avoid a deep prolonged recession and avoid the disaster that it would entail. They may even come to their collective senses. 

There is a voice of reason from Chicago Fed President Charles Evans in his optimistic speech to a National Association for Business Economics conference could be heard clearly describing a path to a soft landing.

Check it out: Evans: Close Alignment On Rate Hikes, Still Chance For Soft Landing – Options Trading Report

So, is the rest of the Fed Board listening? 

Thursday will bring a lot of information, Inflation and unemployment rates being the most anticipated. Maybe the economic tailspin we are in right now can be stopped before we crash.

Future Fed Forecast. Interest Rate, Inflation, Housing, Employment Pedictions

Inflation and Interest Rates are the two main concerns for most working class people taking money out of their pockets, taking food out of their mouths, and too often taking hope out of their lives. 

Will the Fed succeed in bring some relief? Not for quite a while. Expect interest rates to continue to rise for the rest of 2022 and into 2023. Inflation won't be whipped for a couple quarters, unless we get pushed into a deep recession. Housing prices will continue to drop and the unemployment rate slowly rise.  

NerdWallet has some good insights: https://www.nerdwallet.com/article/finance/timeline-for-lower-prices-and-rates

Be aware and prepare! Pay off those high interest rate credit cards, save up some emergency funds, and keep a few bucks on hand, there will be a sale on some quality dividend stocks.  

IMF Calls For Fiscal Responsibility. Is the Fed listening? Is Biden?

 A darkening world economic outlook, indeed. IMF downgrades world growth projections with the rising risks of worldwide recession.  

It would seem the IMF is worried about inflation. I wonder if these folks and the Fed get their haircuts at the shop? 

UPI breaks the news: https://www.msn.com/en-us/money/markets/imf-presents-darkening-outlook-for-global-economy/ar-AA12FT6x

For reference, in case you were wondering, check out the last 20 years of USA GDP growth. 

U.S. GDP Growth Rate - Historical Data
Year	GDP Growth (%)	Annual Change
2021	5.67%	9.08%
2020	-3.40%	-5.69%
2019	2.29%	-0.63%
2018	2.92%	0.66%
2017	2.26%	0.59%
2016	1.67%	-1.04%
2015	2.71%	0.42%
2014	2.29%	0.45%
2013	1.84%	-0.44%
2012	2.28%	0.73%
2011	1.55%	-1.16%
2010	2.71%	5.31%
2009	-2.60%	-2.72%
2008	0.12%	-1.89%
2007	2.01%	-0.77%
2006	2.78%	-0.70%
2005	3.48%	-0.37%
2004	3.85%	1.06%
2003	2.80%	1.10%
2002	1.70%	0.74%

Will the Fed finally get it right, or are we doomed with a deep recession starting soon?

The only way out is to reverse these interest rate hikes and again began a program of quantitative easing - and do it soon! 

The US Dollar is near the stratosphere and headed higher at a rocket pace. International economic disruption could be just a Fed meeting announcement away. 

Business Insider has it right. Soaring US Dollar to Spark a Fed Pivot, but That's Not Enough for Stocks (businessinsider.com) 

And what you really need to know?

The real rate of inflation.  Alternate Inflation Charts (shadowstats.com)

The Fed's Fatal Flaw - Using a Wrong Measurement to Fight Inflation.

The Fed has won the Battle against Inflation. They just don't know it. 

Opinion: The Fed has won a major battle against inflation but doesn't believe it because the data have a fatal flaw - MarketWatch

By keeping on the track to raise interest rates and to reduce buying mortgage backed funds, they may be forcing the USA, and maybe the world, into a severe, prolonged and deep recession. 

Biden Inflation Reduction ACT will FAIL - Per the Congressional Budget Office and Bernie Sanders

Amazing, isn't it? When the CBO makes a determination seems to support a bill the party in power likes, then the CBO can never be wrong. BUT, if they make a determination, as they did this time, that a bill will not do what the politicians say it will, they of course they are often wrong, or make the wrong assumptions, or just plain don't understand how the bill works.   White House stands by Inflation Reduction Act after CBO warns inflation won't drop as a result (msn.com) 

Both PennWharton and the CBO agree, the bill just won't do much for inflation. I wonder if PennWharton is now on the political shade throwing hit list.   Inflation Reduction Act: Comparing CBO and PWBM Estimates — Penn Wharton Budget Model (upenn.edu)

Even Bernie Sanders knocks the bill!   Bernie Sanders knocks Schumer and Manchin's big climate and healthcare bill, calling it the 'so-called Inflation Reduction Act' (msn.com)

And then we have a group of 230 economists predicting the bill will fail to curb inflation, and in fact may actually cause ore of it. And, of course, these economists must be labeled as WRONG. Senator Schumer even said it out loud.   Schumer calls economists 'wrong' who are cautioning Manchin's spending bill will increase inflation | Fox Business

Plain as the nose on your face? Is Senator Schumer now deriding the nose-less? Or is it the nasally challenged?   Senate poised to work through the weekend to advance economic package - The Washington Post

Here's the CBO report. You can actually judge for yourself.   H.R. 5376 Inflation Reduction Act of 2022-Revised Tables (cbo.gov)

Inflation Continues under Biden's Watch.

The hits just keep coming and coming. Inflation is harder to beat than a downtown traffic ticket. 

So what do they decide to do? Pass bills to put more money out for climate change, among other items. Update will follow.

Inflation figure that the Fed follows closely hits highest level since January 1982 (cnbc.com)

Biden's Recession is here! 2022 Q2 and Q3 GDP drops and inflation is raging at 9%

Well, that didn't take too long. 

Almost to the day, 18 months after Joe Biden took office the USA has officially entered into a recession. Two sequential quarters of economic data reported a declining Gross Domestic Product (GDP).

And don't let anyone fool you! This is the definition of a recession. They may try to call it by another name or even deny it. Every possible distraction will be announced and pronounced, proclaimed and exclaimed.  

Economy shrinks for second consecutive quarter as Biden mocks recession 'chatter' - Washington Times

A Recession Before the Midterms: History is Not on Biden's Side (msn.com)

Biden: Economy slowing down but not in recession (usatoday.com)

Inflation and the (Rising) Cost of Living - Prepare NOW

For years the US government has consistenly understated both the rate of inflation and the impact this form of hidden taxation takes on you and your fellow citizens. The BIG MAC TM Index shows the penalty inflation applies to all of us.



Coutesy of Seeking Alpha - The Big Mac And Your Financial Health

James Cornehlsen takes us furthur along this path applying the BIG MAC TM Index results to bonds, stocks and investments, with a very worrying conclusion.

As for myself, I am a believer in commodities over the next several years verses stocks or bonds. Why? Accelerating dollar inflation and the proven track record of gold and silver. 

Prediction: Year end 2013 brings gold at $1,950 per troy ounce and silver to $55.00. And the currently overvalued stock market sinks the Dow to $11,300.

 

The Enemy Approaches Unseen - and Will Strike Soon!

Inflation is a killer. In more ways than most imagine, by higher prices up the chain from manufacturing, food production, then transportation, distribution, and final delivery. With the QE Train at full speed, it is only a matter of time before it strikes, and strikes hard. The only question is whether there will be a brief deflationary period before the monster surfaces.

And now we find the 'experts' are predicting 'explosive inflation'.

Quoting the article at Zerohedge, 'In short: the Fed's DSGE models fail when applied in real life, they are unable to lead to the desired outcome and can't predict the outcome that does occur, and furthermore there is no way to test them except by enacting them in a way that consistently fails. But the kicker: the Fed's own model predicts that if the Fed does what it is currently doing, the result would be "explosive inflation."'

Read more: Explosive Inflation Predicted

Beware and Prepare!