Posted originally on the CTH on January 1, 2023 | Sundance
The New Year brings a look of forward-looking economic perspectives from major financial institutions. Unfortunately, if the perspective of Bank of America Chief Economist Michael Gapen is reflective of the larger institutional analysis, the financial pretending is anticipated to continue.
[Side Note: Notice how they will all start talking about ‘deglobalization’ in 2023. There’s a reason for that that I will touch on in the IMF interview to follow]
Appearing on Face the Nation Gapen accurately indicates the U.S. housing market is already in a steep economic recession, housing prices falling rapidly with a considerable amount of distance to go (-30% range), and the overall housing market will likely be in this situation for around two years. On a macro level the Bank of America indicators line up with the general housing trajectory. From a lending standpoint, Gapen would have specific insight.
Beyond the housing sector, Mr. Gapen starts to get sketchy. He anticipates inflation taking 24 to 36 months to lower to the norm 2% range. That is generally in line with CTH expectations; however, nowhere in the analysis does Gapen even mention energy costs and the overall impact to the economy from energy policy. You will note this absence will be present in almost all financial punditries. Mentioning “energy policy’ as a cause of economic pain is a third rail amid his peer group; it is simply not permitted.
Astute readers will note the great financial and economic pretending that surrounds the Build Back Better and Green New Deal climate change agenda will not be discussed by anyone, ever. The massive price impacts, the supply side inflation pressures, are baked into the western global economic outlooks. It is strictly verboten to talk about climate change policy being stopped, modified, reversed or even, well, gasp, removed. WATCH:
[TRANSCRIPT] – […] BANK OF AMERICA CHIEF ECONOMIST MICHAEL GAPEN: Happy New Year as well. Thank you for having me on.
MARGARET BRENNAN: You know, a majority of voters polled by The Wall Street Journal say that the economy is going to look and feel worse in 2023. What is your forecast?
GAPEN: So I think that’s probably true. I think we’re in a situation where the risk of recession is high, may not be a deep and prolonged one. But we’re in a situation where the economy has recovered very rapidly from- from COVID, and it’s come with a lot of inflation. And the Federal Reserve is trying to slow down the economy, to bring inflation down. And in the past, more often than not, that’s coincided with some sort of recession in the US economy and the U.S. labor market. It’s not baked in. It’s not for certain. We may be able to avoid it, but I would agree that the outlook by most people who sit in the position that I do think 2023 could be a difficult year for the U.S..
MARGARET BRENNAN: So we may be able to avoid recession?