Investor Michael Burry Confirms US will Slip into Recession in 2023

YEREVAN (CoinChapter.com) — Prominent investor Michael Burry believes the US will slip into recession in 2023. The Scion Asset Management founder, who correctly predicted the US housing bubble collapse before the 2008 financial crisis, shared his views on Twitter. 

Burry said that slowing down the economy in the country will push the US Federal Reserve to take stimulative action. But unfortunately, this will cause the inflation in the country to spike again, resulting in a recession. 

“Inflation peaked. But it is not the last peak of this cycle. We are likely to see [the consumer price index] lower, possibly negative in 2H 2023, and the US in recession by any definition. Fed will cut and government will stimulate. And we will have another inflation spike. It’s not hard,” 

he tweeted. 

However, the National Bureau of Economic Research (NBER), the organization “committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community,” is yet to declare a recession officially. 

NEBR is in charge of defining business cycles based on various indicators. While the period we’re in may bear some of the hallmarks of a recession, the group has not officially declared a slump yet. 

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Recession in the US likely after unprecedented rate hike 

Last month, the Federal Reserve raised its benchmark interest rate to the highest in fifteen years. The 50 basis points increase was the 7th rate hike in several increments in 2022.

The fact that the Federal Open Market Committee (FOMC) voted to boost the overnight borrowing rate by half a percentage point indicates that it has similar expectations.

Before the latest 50 basis points increase, the country had seen a string of four straight three-quarter point hikes, marking the most aggressive policy moves by the Fed in four decades.

Meanwhile, the Fed said there would be more hikes in the future, indicating that the hawkish monetary policy will continue. According to the agency, it will push the interest rates to as high as 5.1% in 2023 before it ends its fight against inflation.

The announcement by Federal Reserve Chairman Jerome Powell had sent the stocks tanking.

The latest comments from Michael Burry suggest that the fight against inflation is far from over. It is worth noting that Hollywood actor Christian Bale played Burry in the film “The Big Short,” which is based on a book by Michael Lewis about the mortgage crisis.