Former Treasury Secretary Larry Summers is warning of a recession after a rise in the Fed’s preferred inflation gauge. Earlier in February, Summers was hopeful that the Fed could pull off a “soft landing” via rate hikes, but after data released Friday showed both the PCE price index and consumer spending rose in January, he says a soft landing looks “less likely.” He also says he would be surprised if a recession could be avoided. Strategic advisor and investor Michael Wilkerson agrees that the Fed’s efforts have been “too little, too late” and predicts inflation to reach between 8 and 12% this year.

Business Insider/Ryan Hogg
Larry Summers says increases in the Fed’s preferred inflation gauge are `very troubling’ as he warns of a likely recession

Former US Treasury Secretary Larry Summers described the latest rise in the Federal Reserve’s preferred inflation gauge as “very troubling” as he renewed his messaging that a recession was likely.

The personal consumption expenditure (PCE) price index rose by 5.4% in January, quickening from December’s 5.3% pace, data released Friday showed, in an apparent resurgence of price pressures.

Consumer spending also rose, suggesting that the Fed’s aggressive interest-rate increases over the past year haven’t adequately cooled demand yet. Summers was ominous in his response to the figures.

Continue reading, here.

Kitco News/Cornelius Christian
Inflation could reach 12% in 2023 with ‘V-shaped recovery’ next year – Michael Wilkerson

Although U.S. inflation peaked at 9.1 percent in June of last year and has cooled down for 7 months in a row with January’s CPI reading of 6.4 percent, prices will reverse course and rise in 2023 according to Michael Wilkerson, Founder of Stormwall Advisors and Author of Why America Matters: The Case for a New Exceptionalism, who sees inflation reaching between 8 and 12 percent later this year.

Wilkerson, who has three decades of experience as an emerging markets investor, M&A expert, and business leader, including as managing director at M&A firm Lazard, said that inflation has yet to catch up to M2 money growth.

You can read the full article, here.

Why One Strategist Believes The Recession Starts By Mid-Year, “That’s When The Cutting Begins”

Amid the mounting speculation of a soft landing, and even chatter of a “no landing” (see here and here), one strategist is laughing at the market’s renewed sense of optimism and hope, which he counters simply by observing the latest economic and Fed developments and says that “a typical end-cycle environment is coming into place — mixed economic signals with a downward bias combining with a Fed laser-focused on corralling inflation by reducing labor demand.”

Yes, for TS Lombard economist Steven Blitz, there is no thesis drift (or rather elevation) and his big picture assessment refuses to budge: “recession will result.” Here’s why: “Forget the Fed stopping to wait and watch and hope that inflation bends towards 2% without a recession. That horse has left the barn. A key question is where the funds rate is when the Fed realizes recession is already underway.”

You can read the full article, here.

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