Wall Street Veteran: Recession is Inevitable, US Economic Decline Will Begin in 2024
As the co-founder of investment firm Grantham Mayo Van Otterloo, Jeremy Grantham has been in the business of Wall Street for a very long time.
When it comes to the economy, he knows what he’s talking about.
Leaning on that expertise, Grantham claimed that, despite what some “experts” say, an upcoming American economic recession is inevitable.
Those experts, including a growing number of economists and Federal Reserve staff members, believe a recession can be avoided.
Speaking with Bloomberg on Aug. 18, Grantham explained why these experts, those from the Federal Reserve in particular, are wrong.
Wall Street veteran Jeremy Grantham says the Federal Reserve is dead wrong when it says a recession can be avoided.
“We will have a recession running, perhaps, deep into next year.” pic.twitter.com/WqTGnSltBu
— Michael Austin (@mikeswriting) September 3, 2023
“The Fed’s record on these things is wonderful. It’s almost guaranteed to be wrong,” he said in response to the Reserve’s optimism.
“They have never called a recession, and particularly not the ones following the great bubbles.”
In early 2022, Grantham claimed that the United States economy was in a “super bubble.”
According to Barron’s, a “garden-variety bubble” occurs “when the market… rises quickly, ignoring significant risks that eventually send prices plummeting.”
Because of inflation and other causes, the price of products rises at an outpaced rate to their actual value.
When the bubble finally “pops,” it can cause catastrophic damage to the economy.
According to Grantham, the situation the U.S. now finds itself in will end with “a recession running perhaps deep into next year and an accompanying decline in stock prices.”
In the past, Grantham has made accurate predictions forecasting economic downturns. This includes those that occurred in 2000 and 2008.
“I suspect inflation will never be as low as its average for the last 10 years; that we have reentered a period of moderately higher inflation and, therefore, moderately higher interest rates,” Grantham said.
“In the end, life is simple. Low rates push up asset prices. Higher rates push asset prices down.”
“We are now in an era that will average higher rates than we had for the last 10 years.”
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