After nearly three years of the economic and financial market distortion due to COVID lockdowns, money printing, and massive government borrowing, some of these distortions are subsiding. For example, the federal budget deficit in FY2021 was $2.78 trillion, but for FY2022 (which ended on 9/30), it fell to $1.375 trillion.
Most investors we talk to think the US is already in a recession or that a recession will start by the end of 2022. We think they’re wrong on both counts.
"How's business going with everything going on in the markets these days?"
We've gotten that question more than a couple of times the last few months. And the truth is, it's an easy answer - business is booming.
"Well that's great to hear. Why do you think?"
Recent economic reports further undermine the politically-motivated argument from earlier this year that the US was already in a recession. They also undercut the Fed’s hopes that inflation will soon subside.
We are not “recession deniers,” we just don’t think one has started yet. The distortions of economic activity from lockdowns, massive deficit spending, and money printing are immense. It’s hard to imagine the US can unwind these policies and not have a recession.
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