The US economy seems to be moving towards one hard landing and to induce a recession according to the chief economist of Deutsche Bank, one of Europe’s largest banks. It concerns David Folkerts-Landau, who says that a recession is almost impossible to avoid in America due to the aggressive interest rate policy of the Federal Reserve. Even if we succeed in bringing inflation down, USA Today knows to inform.
US recession
In the past 15 months, the US Federal Reserve raised interest rates by more than 5 percent. “America is heading into its first policy-driven boom-bust cycle in the last 40 years. The inflation we are seeing was the result of accommodative monetary policy and the aggressive interest rate hikes needed to tame that inflation are what we have now seen. Preventing a hard landing is historically impossible,” says Folkerts-Landau.
The Folkerts-Landau team argues that the Federal Reserve is likely to push inflation further down, after which a recession around the March 2024 period will force them to cut interest rates.
Analysts expect the Federal Reserve to cut interest rates in the same aggressive fashion as we’ve seen in the reverse fashion in recent months.
This would then involve reductions of 0.50 to 0.75 percent, until the interest rate eventually reaches 2.625 percent. Then, according to Deutsch Bank analysts, it is time for a short break.
Artificial intelligence
Any rescue for the US economy could come from artificial intelligence, according to analysts at Deutsche Bank. If that sector continues to develop in this way, it may provide a boost to the US economy.
Given the poor cyclical outlook, low productivity and poor demographics, the economy is desperate for new sources of growth.
According to legendary investor Stanley Druckenmiller, artificial intelligence has what it takes to show the rest of the stock market its heels.
Initially, a recession would not be good for Bitcoin, as people would then be forced to sell assets to survive. As soon as the money printers turn on again, the price can get a boost again.