Steve Forbes has warned that our economy is “dead in the water.” “In terms of the 2.6% [the annualized rate at which the U.S. economy grew], if you look at final sales, which is what economists do, the economy is dead in the water.” Forbes said the economy was growing at over 4% when Biden took office. “Look at it today,” he said, adding that “hard times are coming.” In other news, all eyes are on the Fed this week, which is expected to announce its fourth consecutive 75 basis point interest rate hike.
Business Insider/Zahra Tayeb
The US economy is ‘dead in the water’ and inflation is squeezing consumers, Steve Forbes says
The US economy is “dead in the water” and inflation is still biting on consumers’ wallets, according to Steve Forbes.
In an interview with Fox Business, the chairman and editor-in-chief of Forbes crushed President Joe Biden’s optimism on the US economy. This despite the country’s gross domestic product beating expectations in the third-quarter.
According to latest figures, the U.S. economy grew at an annualized rate of 2.6% in the third quarter of 2022. The increase came after two consecutive quarters of decline.
He said Biden’s rosy view of the US economy is false, and makes him out to be a comedian but “the audience isn’t laughing.”
You can read the full story, here.
Reuters via U.S. News/Anna Saphir
Fed Set to Deliver Another Big Rate Hike, Debate December Downshift
U.S. central bankers are expected to keep their inflation fight in high gear this week, even as they intensify a debate over when to downshift to smaller interest rate hikes so as to avoid sending the world’s biggest economy into a tailspin.
With the Fed’s preferred measure of inflation running at more than three times its 2% target, the outcome of the central bank’s policy meeting on Tuesday and Wednesday is not in doubt: it will raise rates by three quarters of a percentage point for the fourth straight time, bringing the target overnight lending rate to a 3.75%-4.00% range.
But what’s next is less clear.
After the last meeting, in September, Fed Chair Jerome Powell said that “at some point” it will be appropriate to slow the pace of rate hikes and take stock of how the sharpest rise in borrowing costs in 40 years is affecting the economy.
You can keep reading, here.
Kitco News/David Lin
90% chance a ‘pretty big recession’ strikes by 2023 as money supply shrinks at ‘unprecedented’ rate – Steve Hanke
Third quarter real Gross Domestic Product (GDP) rose by 2.6%, according to data released by the U.S. Bureau of Economic Analysis on Thursday. This was higher than the consensus estimate of 2.4%, and follows two consecutive quarters of GDP contraction.
Steve Hanke, Professor of Applied Economics at Johns Hopkins University, believes that a recession is still likely. In fact, Hanke told David Lin, Anchor for Kitco News, that he has recently updated his probability of an upcoming recession to 90%.
The shrinking money supply is mainly responsible for deteriorating economic conditions to come, Hanke said.
“Where we’re going is determined by where the money supply is going,” he said. “The Quantity Theory of Money is a way to determine national income determination. We had the money supply being goosed in early 2020, when COVID hit, we had the money supply growing, on average, about three times faster than it should have been growing to hit a 2% inflation target. As a result, we had a lot of inflation.”
Continue reading, here.