According to Mike McGlone, Bloomberg Intelligence’s senior commodity strategist, the US economy is headed towards a “severe deflationary recession,” with the Federal Reserve continuing to tighten up. He warned that commodities are collapsing at an alarming rate, and the Fed’s vigilance against inflation is not helping matters. McGlone’s statements were made in an interview with Yahoo Finance Live, and serve to highlight the current state of the US economy.
The strategist went on to describe the current situation as “pretty serious credit crisis,” with the pulling back of deposits from major banks, indicating that this is just the start. McGlone emphasised industry trends, saying that “annualized industrial demand for natural gas in this country” has reached its lowest in six years.
“The Fed is still tightening,” he added. “Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that.”
Commenting on recent economic data, McGlone noted that the Federal Reserve continues to talk about raising interest rates higher, despite the trend of misses he sees on the PPI and retail sales. He believes that this is all indicative of a recessionary period that the US is currently in. “The markets are getting it. T-note yields, 10-year notes are getting it, but the Fed is still being vigilant against inflation,” he said.
He also pointed out that PPI is heading towards negative by the time we reach July, which is “just what happens normally when commodities collapse.”
Many experts have expressed similar concerns about the US economy for quite some time now, with some warning of a severe recession years in advance. With the ongoing situation and McGlone’s statements, that danger seems to be growing more pronounced by the day.
Recessionary periods are characterized by economic slowdowns and a decrease in consumer spending. Such periods can lead to job losses, bankruptcy, and other negative economic consequences. Inflation and interest rates also tend to drop in these situations, further exacerbating problems in the economy.
It is important to note that McGlone’s warning is just a prediction. It is not meant to be taken as a matter of fact, and the situation may well be different. However, his comments do provide a valuable perspective on the current state of the US economy and serve as a warning to businesses and individuals to be careful in the coming months.
For instance, company leaders may benefit from taking steps to manage expenditure, cutting non-essential outgoings, and being proactive about managing cash flow. Similarly, individuals may want to look at ways of reducing spending and building up an emergency fund to provide financial support in the event of a job loss or other emergency.
In conclusion, the US economy may well be in a challenging situation. Commodity prices are falling, and the Federal Reserve is still tightening up, despite clear economic indicators. Mike McGlone’s warning provides a valuable perspective on the current situation and serves to highlight the need for business leaders and individuals to be extra vigilant in the coming months. With careful planning and management, however, it may be possible to ride out this difficult period and emerge stronger.
