Get ready to laugh out loud as we take a look at the latest predictions from the Chairman and CEO of BlackRock, Larry Fink, on the state of the US economy. Apparently, Larry thinks the US might just dodge a major economic downturn this year, but hold onto your wallets folks because inflation is going to be sticking around like a pesky mosquito.
During an interview with CNBC’s “Squawk on the Street” on Friday, the world’s biggest asset manager stated, “No I don’t see a big recession… I’m not sure we’re going to have a recession in 2023, we may have it in early 24.” Say what now? Is Larry Fink a fortune teller too? Who knows!
It turns out that the potential recession according to Mr. Fink hinges on the Federal Reserve’s attempts to battle inflation. The central bank has already upped its benchmark interest rate nine times, which is the greatest rate of tightening since, wait for it, the early 1980s, when hair was teased and shoulder pads were in. BlackRock is a solid player with $9 trillion in assets, but Larry believes that the potential for recession is all down to the ‘pathway of inflation of the short run and pathway to the Fed’. We’re not entirely sure what that means, but we’re hoping a cartoon strip will clarify it for us.
Mr. Fink went on to say, “I believe inflation is going to be stickier for longer… In other words, I think we’re going to have a 4ish floor in inflation.” A 4ish floor?! What does that even mean, Larry?!
Any good news? Well, the CPI, a measure of the costs for goods and services in the US economy, did rise just 0.1% last month and by 5% from a year ago, cooler than expected. However, the Fed is still not comfortable, and they’re targeting a 2% inflation level deemed healthy and sustainable.
In light of all this, it seems BlackRock’s clients have decided to limit their risk as the macro environment is a little gloomy. They’ll be keeping their portfolio more holistic and resilient by making sure they have a solid foundation of bonds and equities. Way to go for being sensible, guys!
So there you have it. The economy might just escape a recession until 2024, but inflation’s going to stick around like an unwelcome guest. Hold onto your hats, people, it’s going to be a bumpy ride!
Serious News: cnbc
