Jakarta, CNBC Indonesia – A recession is almost certain to occur in the United States (US) and the rest of the West, where the central bank has been very aggressive in raising interest rates to curb inflation.
Economic contraction for at least two consecutive quarters is always seen as bad. However, this time the recession is said to be able to solve three complicated problems that the economy is experiencing.
This was disclosed by Nicholas Colas, co-founder of DataTrek.
“The market sees a recession as a ‘feature, not a bug,'” Colas said as reported by Business Insider, Friday (21/4/2023).
The three problems are high inflation, the US central bank (The Fed) which is aggressive in raising interest rates, and declining productivity in the labor market.
Colas said, since 1960, these three problems can be resolved quickly when a recession occurs.
“The US stock market is not only looking at past and coming recessions, but is actually waiting for the economy to contract,” Colas added.
However, many analysts predict the US stock market (Wall Street) will experience a short-term slump when a recession occurs. Analysts from JP Morgan, for example, predict that Wall Street will fall by at least 15% even though the recession is relatively mild.
Legendary investor, Jeremy Grantham, even predicted that Wall Street could fall by up to 50% due to the assets that are currently called bubbles.
(pap/pap)
2023-04-24 14:59:53
#Market #Players #Praying #Recession #Happen
