Michael Burry has said that the US economy is about to go into a recession in 2023.
The investor of "The Big Short" fame gave a gloomy forecast on Sunday.
The inflation peaked. He said that it is not the final peak of the cycle. The US is likely to be in a recession in 2H 2023 and the consumer price index is likely to be negative in 2 years.
He said that the Fed will cut and the government will make more money. We will have more inflation. It is not difficult.
The US Federal Reserve's 2% target was well ahead of the inflation rate which rose to a 40-year high of 9.1% in June. The central bank hiked its base interest rate from zero to 4% and said it will peak at 5% in three years.
Higher interest rates are meant to discourage spending, investing, and hiring. They can lead to declines in asset prices and eventually a recession.
The Fed will cut rates and the government will boost spending in an effort to spur growth in order to drive up demand and cause inflation to rise again.
The post-pandemic reopening of the economy could lead to higher inflation, according to the chief of the Scion Asset Management. American households were putting away less money each month, racked up debt, and were on track to exhaust their savings by the end of the year, raising the prospect of a slump in consumer spending and a long recession.
The book and movie "The Big Short" chronicled Burry's billion dollar wager against the mid-2000s housing bubble.
The Scion chief sounded the alarm on the "greatest speculative bubble of all time in all things," warning buyers of meme stocks and cryptocurrencies that they were barreling towards the "mother of all crashes."
The 'Big Short' investor is special, according to an expert. He revisits Burry's bet against the housing bubble as well as his other bets.
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