90% Chance of Recession?

No, Says Goldman [The Daily Reckoning] March 01, 2023 [WEBSITE]( | [UNSUBSCRIBE]( 90% Chance of Recession? - Two very different recession forecasts… - The perfect recipe for recession?… - The case for optimism… [Download My New Survival Guide Today!]( I’ve created a BRAND-NEW “2023 Crisis Survival Guide” that I’m making available to all of my Strategic Intelligence readers today. This short 54-page document has everything you need to know to protect yourself and your family in times of crisis. Things like what foods to stock up on now, staying safe during periods of rioting and looting and more. Inside I break down all of the coming threats you face and how to prepare. [Click Here Now]( Annapolis, Maryland [Brian Maher] BRIAN MAHER Dear Reader, Deutsche Bank’s crackerjacks give 90% odds of recession over the next 12 months. Goldman’s own crackerjacks give merely 25% odds of the same. Which divination has more justice in it? Here is the rock of the Deutsche Bank pessimism, set forth by its own Jim Reid: Most (but not all) big hiking cycles bring recessions with a lag…[and those that do] "tend to be when the Fed is furthest away from its dual mandate…” We would remind you that the Federal Reserve has been undertaking a “big hiking cycle.” Its pace is, in fact, the greatest in over three decades. And as we have noted before: Monetary policy generally runs to a lagging schedule. It often takes effect nine–12 months after cycle’s onset. The present hiking cycle commenced last March — 12 months ago. Thus it is reasonable to keep the recession warnings posted. Inflation and the Fed’s “Dual Mandate” Meantime, this Reid fellow argues that… in reminder… a hiking cycle is most likely to birth recession “when the Fed is furthest away from its dual mandate.” The Federal Reserve’s so-called dual mandate demands price stability and maximum employment. How far distant is the Federal Reserve from its cherished objectives of price stability and maximum employment? The latest inflation data reveal that consumer prices rise 6.4% higher than last January’s. “Core” inflation — stripped of more variable components such as food and energy — runs 5.6% above last January’s. The Federal Reserve sets great store by the core inflation gauge. Yet at 5.6%, this inflation rate races far beyond the Federal Reserve’s desired 2% inflation rate. Under no reasonable interpretation does “price stability” prevail. If Mr. Reid’s telling is accurate, this tremendous gap fortifies the case for recession. What about the Federal Reserve’s twin mandate — maximum employment? Torture! The latest official report informs us that the unemployment rate gutters at a 54-year low… at 3.4%. By any fair standard, maximum employment. Yet as we have maintained before, we trust government statistics no further than we would trust a dog with our dinner. Depending on the dish… we may trust the dog far more than the government, in fact. [Crypto Legend Reveals: “The Next Bitcoin”]( He called Bitcoin at $61. Now he says this next crypto will be even bigger. In fact, he’s targeting 25X gains over the next year alone… [Click Here For More Details]( The government’s statistical inquisitors will stretch the numbers upon the torture rack and proceed against them in truly barbarous fashion until the numbers confess. If the government inquisitors demand a vastly exaggerated GDP reading, they will torment the numbers into compliance. If the government inquisitors demand a vastly reduced inflation reading, they will torment the numbers into compliance. And if the government inquisitors demand a vastly reduced unemployment reading… they will torment the numbers into compliance. This they accomplish through the aggressive use of “seasonal adjustments” and other such implements of numerical torture. Exposing Government Fictions The Wall Street Journal’s Jon Hilsenrath: Demand for U.S. workers shows signs of slowing, a long-anticipated development that is showing up in private-sector job postings even while official government reports indicate the labor market keeps running hot. Here is affirmation from a certain Ian Siegel of online job recruiter ZipRecruiter: Clearly, we’re in a macroeconomic slowdown, and online recruiting has effectively cooled across the country. Concludes the pseudonymous Tyler Durden of Zero Hedge: Of course, it's not just job openings where the Labor Department is dead wrong: in fact, virtually every labor market metric, from unemployment to payrolls, has been skewed to represent a stronger economy. Whether this is due to flawed seasonal adjustment metrics, or recurring taps on the shoulder from the Biden admin which is unwilling to admit the true state of the labor market, it has gotten so bad that last week even "JPMorgan lashed out at ridiculous seasonal adjustments in key U.S. data," with the simple implication: The real jobs data is far weaker than what the Biden admin is representing. The Perfect Recipe for Recession Let us assume the foregoing is grounded very deeply in fact. The true unemployment runs substantially higher than the official 3.4%. The economy is far from maximum employment. Now let us recall the Deutsche Bank prophecy: Most (but not all) big hiking cycles bring recessions with a lag…(and those that do) "tend to be when the Fed is furthest away from its dual mandate…” The Federal Reserve is very deep into a “big hiking cycle.” At the going inflation rate, it deviates widely from “price stability.” And if the official unemployment data has been tortured and distorted out of all semblance… the Federal Reserve deviates widely from “maximum employment.” Take the three ingredients in hand. Now combine them and mix them together. Do you not have the nearly perfect recipe for recession? [Urgent Notice From Paradigm CIO Zach Scheidt!]( [Click here for more...]( Hi, Zach Scheidt here… I’m the Chief Income Officer at Paradigm Press. With inflation raging (and showing no signs of coming to an end any time soon), almost everyone in America is feeling the pain in a big way. Which is why, several months ago, I set out on a big mission… my goal was to create a complete, step-by-step plan to surviving and beating inflation… one that anyone could take advantage of. Today, after hundreds of hours of research, I’m revealing all of my findings. See how to survive America’s deadly inflation crisis… [Click Here To Learn More]( Biden’s on the Hooks of a Dilemma And why — Mr. Durden — does the foregoing matter? This matters because as Hilsenrath notes, upwardly manipulated government data on job openings and hiring "are among the reasons Federal Reserve officials believe the U.S. economy is overheated, fueling high inflation. Fed officials are raising interest rates in an attempt to slow growth and reduce price pressures. If government reports move in line with the recruitment business, Fed officials could feel less pressure to move aggressively." In other words, the BLS is faced with a dilemma: Admit how bad the U.S. labor market is and stop the stock market bleeding, or keep pushing the lie of economic growth and add a market crash to Biden's list of all too real woes. If true, the president indeed hangs from the hooks of a lovely dilemma. Yet we are certain he will confront this dilemma with the identical pluck and determination with which he confronted Russian aerial bombardment in Kyiv. Not even a wailing air raid klaxon would shake him! Did you see it? But to proceed… The Case for Optimism To this point we have given ear to the Deutsche Bank We have neglected Goldman’s far sunnier economic forecast. Recall, they give mere 25% odds of recession within the following 12 months. What weather reports is Goldman reading? Those issuing from the Bureau of Labor Statistics. Goldman takes the numbers as BLS presents them. Mr. Jan Hatzius, Goldman’s chief economist: We have cut our subjective probability that the U.S. economy will enter a recession in the next 12 months from 35% to 25%. Continued strength in the labor market and early signs of improvement in the business surveys suggest that the risk of a near-term slump has diminished notably. Just so. We of course cannot determine if the Deutsche Bank forecast or the Goldman Sachs forecast will prove accurate. Yet we concede it readily; we incline toward the Deutsche Bank position. We believe we have revealed our bias by giving it a far greater airing. It is nonetheless critical to mull both positions. “Both optimists and pessimists contribute to society,” argued George Bernard Shaw, concluding that: “The optimist invents the aeroplane, the pessimist the parachute.” Yet we are presently strapped to a parachute… Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Editor’s note: Since Jim Rickards posted his original Biden Bucks presentation online, millions of people have viewed it. Snopes and The Associated Press have even attempted to “fact check” Jim and claim that his warnings are false: [click here for more...]( Point being, Jim’s message has raised a storm and caused a lot of controversy. But in the time between his message and now, a lot of new developments have come to light. That’s why Jim’s just released [a critical update to his original prediction…]( one which will likely be even more controversial. Jim’s created a BRAND-NEW [“2023 Crisis Survival Guide”]( that he’s making available to his readers today. This short 54-page document has everything you need to know to protect yourself and your family in times of crisis. Things like what foods to stock up on now, staying safe during periods of rioting and looting and more. Inside Jim breaks down all of the coming threats you face and how to prepare. This is important. [>> To see how to download your copy, click here now.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Brian Maher] [Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. 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