» REPLAY | Monthly | GDP Conference Call | Where’s the Recession? Slowdown Sure, But Entrenched High Inflation – 10/27/22 Decision Economics

REPLAY | Monthly | GDP Conference Call | Where’s the Recession? Slowdown Sure, But Entrenched High Inflation – 10/27/22

Posted October 27, 2022 by rvillareal

REPLAY | GDP Conferene Call | October 2022

Where’s the Recession? Slowdown Sure
But Entrenched High Inflation

  • Q3 U.S. Economy (1st Report)—Ain’t Any Recession Here-and-Now
    • Real GDP Q3 Summary—Strong?  Slowdown?  Mixed?  Recession?
    • What’s Strong, What’s Weak?
    • Motion is “Boomy Expansion” to “Slowdown or Transition” or “Recession?”
    • Recession Indicators Monitor
  • Inflation—Has it Peaked?  Is Diminishing Noticeable?  Where, How Much, How Long?
    • Classic Demand-Pull—with S-Side Shocks
      the Pandemic and Russia-Ukraine War
    • Demand-Pull—the Pentup Demands, Super-Stimulative Monetary and Fiscal Policies Reactions, and Internal Inflation Dynamics
    • “Inflation Genie Out-of-the-Bottle”—Inflationary Process Ongoing Entrenched High—Stages-of-Processing Sequence and Time Lags
    • “Phillips Curve”—Maybe Back to an Extent
    • Underlying Inflation Dynamics
  • DE Baseline—“Soft Landing” (Odds 55%); “Recession” (Odds 30%); “Growth Recession” (Odds 10%); Something Else (Odds, 5%)
    • DE Baseline Parameters—Growth, Inflation, Unemployment, Earnings
    • Slowdown and Slow Growth Most Likely—Transition From Boomy Expansion to Weaker Can Appear Recession-Like
    • Big Housing and Residential Construction Downturn (3.4% of Real GDP)
    • Aggregate Consumption Growth the Engine (About 70% to 71% of Real GDP)
  • Fed Policy— Mission Still 2% Inflation—Believe What Chair Powell Says—No Pivot
    • DE Monetary Policy Forecast—Federal Funds Rate—75; 50; 25 Each Qtr 2023; and QT
    • Interest Rate Forecasts—Rising Rates, on Average, Fed Funds 5-1/3% by Second Half 2023; Upside Open-Ended
    • Note Positive Real Rates Fed Comments
  • Financial Markets—Equity Market
    • Equity Market Earnings—Still Growing but Much Slower
    • Earnings Still Supportive to Equities at Current Levels
    • Fair Value and Fair Value Ranges—S&P 500 3300 to 4000; P/E Near-to-Intermediate in Range 14-to-17
  • Summary—Neutral Equities; Bearish Fixed Income; Bullish U.S. Dollar