According to Bob Michele, who is the chief investment officer for JPMorgan Chase’s asset management arm, the current market situation reminds him of a deceptive lull observed during the financial crisis that took place in 2008, according to CNBC.
Michele highlights that previous rate-hiking cycles have typically been followed by recessions around 13 months after the final rate increase of the Federal Reserve. He predicts that the greatest impact will be felt in three areas: commercial real estate, regional banks, and junk-rated corporate borrowers.
The calm before the storm?
Despite the resilience shown by the American economy, Michele believes that the next few months will represent the calm before the storm, anticipating a recession occurring by the end of the current year. While there may be a delay due to the lingering effects of Covid stimulus funds, Michele is confident that a recession is inevitable within a year.
More and more financial experts are talking about an impending recession in the US. David Trainer, who is the CEO of New Constructs, stated as Forbes quotes:
Walmart is a bellwether for consumer spending and health, which is not in dire straits, but it is weakening,
Walmart’s earnings add to the idea that a recession is not fully here yet but is likely coming, albeit more slowly and less severe than most expect.
In an article posted about two months ago, we shared the news that Warren Buffet warned that more banks would collapse and that there’s no use for too much concern. The business magnate stated at that time for CNBC, as kitco.com quotes:
People shouldn’t be worried about losing their money and their deposits they have in an American bank, but the message has gotten very confused,
The costs of the [Federal Deposit Insurance Corp.] are borne by the banks. Banks have never cost the federal government a dime … Nobody is going to lose money on a deposit in a U.S. bank.
Overall, the future of the US economy isn’t looking too good. Stay tuned for more news on the subject!