One of the richest individuals in the world and Amazon founder Jeff Bezos has gloomy forecasts for the near future of the US economy.
On Tuesday, Mr. Bezos retweeted a CNBC clip in which David Solomon, CEO of Goldman Sachs, recommended company owners to start preparing for erratic markets in the months ahead.
“In the distribution of outcomes, there’s a good chance we could have a recession in the United States,” Mr Solomon says in the clip.
Along with the clip, Mr. Bezos provided his own remarks, agreeing with the CEO’s assessment of the country’s economic future.
“Yep, the probabilities in this economy tell you to batten down the hatches,” he wrote in his retweet.
However, it is not just wealthy CEOs who are warning of a possible recession; some analysts believe that the Federal Reserve’s efforts to control inflation by raising interest rates will discourage consumer borrowing and spending. Interest rates were at zero in March; the Fed hiked rates to between 3 and 3.5 percent, with the possibility of raising rates to 5% by next year.
Amazon’s current CEO, Andy Jassy, has made measures in the last year that indicate he is similarly concerned about a possible recession. In preparation for a downturn, the company has frozen new hires, reduced spending, and worked to cut costs wherever possible.
CNBC spoke with Steve Hanke, a professor of applied economics at Johns Hopkins University, who predicted a “whopper” recession in the United States in 2023.
However, there are those analysts who disagree.
According to a Forbes article, Jeffrey Roach, the chief economist at LPL Financial, believes the current economic slowdown is not “significant” enough to cause a recession.
“A slowdown has to be significant, broad and sustained before it qualifies as a recession,” he said. “Currently, the economy is downshifting to a much slower growth path, but the decline in economic activity is not ‘significant’ in our view.”
According to Peter Essele, Commonwealth Financial Network’s head of portfolio management, above-average employment growth reports should provide some hope for investors.
“It’s difficult to rectify how some are claiming the economy is in recession when job growth remains well above long-term averages and wage growth is the strongest in decades,” he said.
When it comes to potential economic hardship, the United States is not alone — disruptions to the still-recovering post-pandemic supply chain, significant private and public debt holdings, and commodity price spikes caused by Russia’s invasion of Ukraine have caused some analysts and researchers to warn that a global recession is possible.
JPMorgan Chase CEO Jamie Dimon, who also anticipates a US recession within the next nine months, revealed why he was concerned about the global economy in the company’s 2022 second-quarter earnings release.
“The US economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy,” he said.
“But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road.”
