The US Economy could hit a Recession in 2022. Can the Federal Reserve and Jerome Powell stop it? Or should those invested in the Housing Market, Stock Market, or Crypto SELL NOW?
The US Economy appears to be booming. The unemployment rate just hit a pandemic low of 4.8%. Meanwhile, there are a record 11.7 Million job openings across the country. Wages and jobs are going up. According to Joe Biden and Jerome Powell – the economic recovery is robust and should last well into the future. That’s why the Fed has announced plans for the QE taper and future rate hikes.
But both Biden and Powell could be severely underestimating the chances of another recession that could result in a devastating Housing Market Crash, Stock Market Crash, and Crypto Crash.
The first thing to understand about today’s economy is that it is heavily supported by government intervention. Personal Income in America has managed to increase since the pandemic due to generous government fiscal programs, ranging from stimulus checks to extended unemployment assistance. These government helicopter money initiatives have stimulated consumer demand across the economy.
But what happens now that they are all expiring? After adjusting for government transfer payments and inflation, Americans actually appear to be poorer today than prior to the pandemic. In addition, the total count of jobs across the economy is nearly 4 million lower today than it was in February 2020. That makes the fundamentals of the underlying economy look much weaker than the headline numbers and narratives suggest.
Despite these weak underlying figures, the Federal Reserve appears to be moving ahead with a tapering of Quantitative Easing in November 2021 and potentially interest rate hikes in 2022. In reaction, the bond market has sold off, pushing long-term treasury yields and interest rates up significantly over the last several months.
Thus – at the same time that the US Government is contracting fiscal stimulus, the Fed and Jerome Powell are taking away monetary stimulus. Perhaps in a reaction to the inflationary pressures the US economy has been facing over the last several months as both CPI and PPI have surged to decade highs.
But could all of this be too premature? How will the US Economy all of a sudden react now that the training wheels of Government and Fed intervention are winding down?
Asset markets – particularly in Housing, Stocks, and Crypto – have boomed over the last 18 months. Well above the fundamentals suggested by personal incomes and jobs. With the external fading, will these markets begin to crash?
I know what my thoughts. But I want to hear what you think. Make sure to comment below!
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0:00 2022 Recession Incoming
1:06 3.8 Million Jobs are MISSING
2:04 But 4.8% Unemployment Rate? What’s the Deal?
3:01 Income for Americans is GOING UP
3:58 Wait…How is that Possible?
5:06 Personal Income LESS Government Transfers
5:59 Americans are POORER Today
6:55 S&P 500 up 55%. Home Prices up 23%.
8:06 What Happens when Bubbles POP?
8:55 Interest Rates are Increasing!
9:44 BIG PROBLEMS Ahead?
10:39 The #1 Question for YOU
11:15 Hit the LIKE BUTTON!
#2022Recession #EconomicCrash #HousingCrash