What happens next with the global economy is frightening
Although 2022 was supposed to be the year (Post-Pandemic) that our nation’s economy was to normalize and stabilize, the fact is that this has only occurred in a small way. We are now on our 6th variant of the Coronavirus and although mask mandates are going away, the virus itself is not. The labor market is indeed better however, which is a glimmer of sunlight in the dark clouds.
Additionally, we have seen a somewhat moderate economic growth renewal in our overall productivity; however, with the constraints of The Fed’s rate hikes and a lingering supply chain issue…it appears this may be a short-lived revival in growth. To insert another wrench in the cogs of the spinning economic wheel, you can add the situation in The Ukraine and our own political reorganization within congress and more. To add even another wrench [or blockage] to the mix, you have the out-of-control situation with inflation (tied to rate hikes of course). What this is doing to the stock market is an on-again/off-again scenario. One day we feel there is a bull market, then next we feel the bear market is well underway. Crude oil prices being this high, due mainly to global market trading of the commodity, is not helping matters regarding a stabilized or normalized economy.
The few items the Fed has at their disposal (flooding the market with treasury bonds for example) to calm inflation down, is in my opinion not going to quite do the trick. They can raise interest rates by 50 basis points (1/2 of a percent) each meeting, but in my opinion, this is only going to crash the real estate and stock markets sooner and drive us into a period of extended Recession (or worse). This of course will cause all kinds of turmoil in the economy such as major lay-offs and civic issues related to crime (even murder). My near term forecast before all this happens however, is just simply the fact that the economic growth we have will indeed wane. This flat to negative growth will extend across the globe, because we are interconnected with many other countries regarding our economic performance.
Looking at both the War in Ukraine (Global Tensions) and persistent Covid-19 issues internationally…it is not looking good regarding a world-wide recession either. I would not even rule…