Not the best interviewer but you always get your money’s worth from Dr Lacy Hunt, former chief economist at the Dallas Fed.
The highlights:
- Dr Hunt warns of a hard landing.
- Recent GDP gains are led by consumer spending (+4%) but real disposable income declined (-1%). Personal saving depressed at 3.4%, compared to the GFC low of 2.4%.
- UOM consumer sentiment is below level of previous recessions.
- A sharp surge in the economy often occurs just before recession.
- Dollar is too strong for global stability. It will fall as US goes into recession but then stabilize as the impact flows through to rest of the world.
- Three signs of weakness:
- Negative net national saving has never occurred before in a period where GDP is rising (economy is weaker than we think).
- Bank credit is already contracting. This normally only occurs when the economy is already in recession.
- Inflation is likewise falling before the recession.
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