According to Breitbart Economics Editor John Carney, the U.S. economy will experience a resurgence of inflation which will “disrupt everybody’s narratives,” in an interview with Fox Business anchor Larry Kudlow this week.
Carney cited the growing cost of housing and oil as warning signs that inflation may pick up speed once more.
Carney said, “China has been falling behind, which is the only reason oil has become as cheap as it is. China is ready to inject a lot more stimulus into the economy since Xi Jinping can’t afford for it to be growing at its current pace politically. They will thus return. Oil is going up in price, but it’s not only oil. Look at the rising housing prices for four consecutive months. Therefore, It won’t be affecting CPI for very long. Shelter makes up around 40% of the CPI.”
“Therefore,” he said, “there would be a boom in inflation that would upend everyone’s story. Everyone said that inflation was decreasing. We don’t really have any basis, in my opinion, to anticipate that inflation will stay at its current level.
Jerome Powell, the head of the Federal Reserve, is expected to announce a rate increase during the news conference that will occur after the Federal Open Market Committee session tomorrow, according to Carney.
“We are going toward a hike tomorrow,” Carney said. “The Fed has hinted that it wants to raise rates once more. In fact, I believe that when inflation starts to go up again in the coming months, the Fed will be forced to take action that no one in the market now anticipates. People will be astonished when they have to hike again in the first part of next year, which will seriously disrupt things.”
Kudlow questioned if the comeback of inflation may cause the economy “to double dip into yet another recession next year.”
“I predict a recession for next year. When is the question,” according to Carney. “At this time, it appears that we are increasing by 2%. We expanded by 2% in the first quarter and most likely by 2% in the second, though we won’t know for sure until later this week. We won’t have a recession this year, in my opinion. I used to believe it would happen in the first quarter of the next year. But we are now so strong in so many areas that we won’t likely turn negative up until the second quarter of next year.”
“Therefore, I keep delaying this, which seems absurd given that we consistently predict a recession. It’s simply not here yet,” he said.
Barbie and Oppenheimer’s record-breaking box office performance last weekend in Hollywood was cited by Carney in this week’s Breitbart Business Digest as further proof that American consumers are eager to spend money. This is also the case because the Fed will need to raise interest rates in order to quell the inflationary pressures caused by all of this consumer activity. Carney called the anticipated rate increase by the Fed this week the “Barbenheimer Hike.”
According to Carney, “These box office numbers aren’t the sort of numbers you would anticipate from a public wary of an economic downturn. No evidence exists for the type of defensive saving that frequently triggers or exacerbates a recession. The demand for tickets points to a household sector that continues to spend freely and is ready to take advantage of a summer without too many fatalities, masking and distancing restrictions, and exorbitant petrol prices.”
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