A widely followed economist says a recession is about to hit the US following a weak first quarter performance.
Steve Hanke tells his 628,600 Twitter followers that the country’s economic growth significantly slowed down in Q1 of 2023.
According to the Bureau of Economic Analysis (BEA), the economy grew 1.1% per annum in the first quarter of this year, compared to the growth of 2.6% per year witnessed in the fourth quarter of 2023.
Hanke says that the drastic downturn in economic growth is largely due to the Federal Reserve’s failure to control the money supply.
“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.”
Data from Yahoo Charts shows that in just a few years, money supply (M2) meteorically rose from $15.41 trillion in 2020 to $20.80 trillion at time of writing. During the same period, the Fed’s balance sheet more than doubled from $4.14 trillion to $8.56 trillion.
Earlier this month, the President of the Minneapolis Federal Reserve Bank reportedly warned that a recession is likely in sight as the banking crisis continues to apply pressure on the US economy.
Neel Kashkari said that the Fed’s tight monetary policies over the past year could be the catalyst that starts the contraction of the US economy.
“It could be that our monetary policy actions and the tightening of credit conditions because of this banking stress leads to an economic downturn.