An Economic Recession Is About To Land: Steve Hanke

After a bad first quarter, says a well-known analyst, the US is about to go into a recession.

Steve Hanke tells his 628,600 Twitter fans that the growth of the country’s economy slowed down a lot in the first quarter of 2023.

The Bureau of Economic Analysis (BEA) says that the economy grew 1.1% per year in the first quarter of this year. In the fourth quarter of 2023, the economy will grow 2.6% per year.

Hanke says that the Federal Reserve’s failure to control the money supply is a big reason why economic growth has slowed down so much.

“US economic growth slowed sharply to 1.1%/yr in the first quarter of 2023 from the 2.6%/yr growth in the final quarter of 2022. Thanks to the Fed’s failure to pay attention to the growth in the money supply, a US RECESSION is about to make landfall.”

Yahoo Charts shows that the money quantity (M2) went from $15.41 trillion in 2020 to $20.80 trillion at the time of writing, which is a huge jump. During the same time, the Fed’s balance sheet went from $4.14 trillion to $8.56 trillion, which is more than twice as much.

As the banking problem keeps putting pressure on the US economy, the President of the Minneapolis Federal Reserve Bank is said to have said earlier this month that a recession is likely coming soon.

Neel Kashkari said that the Federal Reserve’s tight money policies over the past year could be what causes the US economy to shrink.

“It could be that our monetary policy actions and the tightening of credit conditions because of this banking stress leads to an economic downturn.

That might even lead to a recession. We need to get inflation down… If we were to fail to do that, then your job prospects would be really hard.”