U.S. is headed for ‘whopper of a recession’ in 2023: Professor Hanke

on Aug 30, 2022
  • John Hopkins' Steve Hanke warns of a meaningful recession in 2023.
  • He expects inflation to remain significantly above the 2.0% target.
  • The S&P 500 index has slid below the 4,000 level again on Tuesday.

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The U.S. economy is headed for much more than just a “technical” recession in 2023, says Steve Hanke. He’s a Professor of Applied Economics at Johns Hopkins University.

It’s not entirely about the rate hikes

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At “Jackson Hole” last week, Fed Chair Jay Powell said a couple months of down readings (CPI) were not enough to stop or even pause rate hikes.

Interestingly, though, Hanke warns of a recession for reasons other than the rapidly rising rates. This morning on CNBC’s “Street Signs Asia”, he said:

We are going to have one whopper of a recession in 2023 because we have had five months of zero M2 growth, money supply growth, and the U.S. Federal Reserve is not even looking at it.

Meanwhile, a “technical” recession is already here since the economy has had two consecutive quarters of negative GDP.

S&P 500 has slid below the 4,000 level again on Tuesday.

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Hanke expects inflation to remain high

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More alarmingly, Hanke warns the consumer prices will remain significantly above the 2.0% target next year because the central bank has failed to realise the “real” cause of inflation.

Fed Chair Jerome Powell does not understand what causes of inflation are and were. He’s still going on about supply-side glitches. He’s failed to tell us that inflation is always caused by excess growth in the money supply.

By the end of 2022, the John Hopkins’ professor expects inflation to be running at 6.0% to 8.0% and does not see it break below 5.0% until 2024.

In 2021, Hanke said inflation could go as high as 9.0% this year. So, he’s been on-point so far.


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