A brand new report coming out of investment research firm BCA Research says that the economy is on the verge of tumbling head-over-heels into a recession. And that’s not all of the bad news. The upcoming rate cuts from the U.S. Federal Reserve are not going to be enough to lead markets out of it. And add yet another reason why it’s critical to ensure you have emergency supplies at the ready. You just never know when things are going to turn out far worse than predicted.
“Every single one of us now believes there’s a recession, and that’s exactly the opposite of what the market believes,” Garry Evans, BCA Research’s chief strategist of global asset allocation said during an episode of CNBC’s “Squawk Box Asia.”
Evans pointed to signs of the economy slowing down, including what he called the “deteriorating” U.S. labor market. The U.S. Labor Department reported that the unemployment rate inched to 4.3% in July to its highest since October 2021, and a gauge for U.S. manufacturing activity fell to an eight-month low in the same month. “There’s things that are breaking down quite rapidly now,” said the strategist.
The Fed funds futures market suggests that investors are expecting at least three rate cuts by the end of the year, according to the CME FedWatch Tool. But according to Evans, that will not move the needle much on his projections. “A few rate cuts are not going to prevent a recession. Average recession is 10 months… It takes something like a year before fed cuts actually start to give a boost to the economy,” he said.
“The market believes that the fed fund rate at the end of next year will be 3%. It’s currently at 5.3%. That will not happen unless there is a recession,” he later stated. The report revealed traders are closely watching the annual economic policy symposium that will be held in Jackson Hole. The event could help clarify the outlook for the interest rate. Jerome Powell, the Fed Chairman, is set to give a talk at the meeting on Friday.
Our economy has been able to stand somewhat despite the massive spikes in inflation and the best efforts of President Joe Biden and his administration. The country has witnessed more than twelve recessions over the course of the last 100 years. Some of these have lasted for over a year and a half. That may not seem all that long, but when you’re struggling to make ends meet and put food on the table for your family, it’s an eternity.
While, for the moment, the nation is not officially in a recession, a survey that was recently conducted by Affirm found that a total of 3 out of 5 Americans feel that it is.
Guaranteed the biggest pinch is coming from the price of groceries and housing, both of which are astronomical at this time.
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