Not to mention, the Fed originally claimed inflation would’ve already been at 2%.
Now, they said inflation won’t hit 2% until 2025.
Their solution to being wrong?
No longer giving guidance on policy outlook.
Follow us @KobeissiLetter for real time analysis as this develops.
— The Kobeissi Letter (@KobeissiLetter) July 27, 2023
“Rollercoaster” Inflation Is Coming to the U.S.
BlackRock has issued a somber prediction for the US economy, suggesting a rollercoaster inflation pattern and an unprecedented “full employment recession.” Considering BlackRock’s broad financial interests, their views should be interpreted cautiously. The firm points to conflicting pressures in the economy: a shift from goods to services spending causing goods deflation, and a tight labor market prompting wage inflation. This could see inflation oscillate before settling near 3%, surpassing the Fed’s 2% target, negatively impacting stocks and corporate margins. Worker shortages could also encourage companies to retain staff despite falling sales, potentially triggering a full employment recession. This grim forecast is underscored by the New York Fed’s prediction of a 67% chance of an economic downturn by June 2024.
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