There is a strong chance that the world’s largest economy will go into a recession. This is what Jeffrey Gundlach, CEO of the investment management firm DoubleLine Capital, has believed since at least the end of last year.
When asked if he thought the U.S. would still go through an economic downturn, Gundlach told Fox Business Network’s “Mornings with Maria” show, “of course.” He also said it was “hard to say” if it would happen this year. As for the idea that there might be a recession in 2024 or 2025, he said “sure.” This is what the interview transcript shows.
Gundlach is known as one of the most powerful people in the financial markets and has been called the “King of Bonds.” However, like many others, he has been wrong about when a recession will start. He was said to have said in September and November that a recession was likely to happen in the first half of this year. Instead, the economy has done better than expected, though this may be beginning to change.
The economy is likely to keep struggling this year because of high inflation, higher interest rates, and rising household debt, according to the Conference Board. On Friday, they released their leading economic index, which showed a drop in April for the second month in a row. The Empire State factory gauge from the New York Fed, which came out last Wednesday, got even worse in May, dropping to negative 15.6. It was the sixth reading in a row that was less than zero, which means things are getting worse.
In the interview, Gundlach said, “I think the data that’s come out in the last week is pretty scary.” “What I mean is…” One month ago, if you broke the economy down into its six or seven main areas, all of them were growing. All of a sudden, this year more of those numbers are declining than rising.
“And the good ones are a little less good,” he said. “So, yes, I do think that all that printing of money made people change their lifestyles to the point where they didn’t want checks from the government but were willing to pay for things with credit cards.” Also, those credit card bills are getting pretty high.
Since there weren’t any big data releases on Tuesday, the financial markets seemed to be pretty stable. In New York morning trading, U.S. stocks DJIA SPX COMP were mixed, and Treasury yields went down a little.
