America’s economy has been in a downward spiral for some time now. While the nation is still recovering from the pandemic, inflation has reached unprecedented new highs.
Just the cost of going to the grocery store is nearly enough to break the bank these days, and experts have warned that things are about to get a lot worse. Wall Street expert Harley Bassman has predicted that the US economy headed for disaster as the country will almost certainly enter a recession next year.
Defining ‘Recession’ and Its Impact
A recession is a dreaded downturn in a country’s economy. Recessions create a “significant, widespread, and prolonged” lack of economic activity.
Americans all over the country would be impacted by a recession, no matter their wealth or economic status. A recession creates long-term financial strain and is something that all Americans prefer to avoid. Unfortunately, Bassman is convinced that a recession will hit the US next year.
Bassman’s Startling Predictions
Bassman, who spent more than 25 years working at Merrill Lynch, Pimco, and Credit Suisse, has cautioned Americans about the imminent recession that is headed their way.
The financial expert anticipates that both the stock and real estate markets will take the biggest hit as prices drop to staggeringly low rates. Bassman also estimates that unemployment and mortgage defaults will rise within the next year.
Bracing for Impact
Bassman currently serves as the managing partner of Simplify Asset Management and recently offered a stark warning for Americans during an episode of the Rosenberg Research’s Webcast with Dave.
He likened inflation to being poisoned by carbon monoxide, as the crippling cost of living continues to soar in the United States. Bassman considers himself an expert in his field, admitting that he learned the hard way after failing to listen to warnings about the mid-2000s housing bubble. During the episode, Bassman delivered several insightful forecasts for the near future.
Bassman’s Toxic Inflation
Inflation is a term to describe when the cost of goods and services increase faster than wages within an economy. The US has seen a spike in inflation since 2020 and prices have continued to climb ever since.
Inflation “decreases the purchasing power of money,” meaning that you can get a lot less for your dollar than ever before. “Inflation is nothing more than a slow-motion default,” said Bassman. “It’s a nice tax, nice in the sense that it’s quiet and silent. It’s kind of like CO2 poisoning in your house. You can’t feel it and it goes across everybody.”
The Housing Market Has Its Own Set of Problems
The real estate market has been hopeless to navigate in recent years, and Bassman is confident that it won’t be improving any time soon.
Trying to purchase a house has become virtually impossible, as there’s a strong demand for property but no supply of available housing. According to Bassman, “Housing is not going to go down because there’s no sellers. Everyone is locked into their house.” He went on to suggest people are virtually stuck living where they are with little hope of ever moving in today’s market.
Buying a House Is an Impossible Feat
Bassman didn’t hold back when talking about why the average American is unable to buy a house in this economy.
“This is some weird form of rent control where you can’t move unless your house burns down, because you can’t refinance at 7%,” he said. “You already have a 3% mortgage. So that’s why prices aren’t going down.” Bassman offered a bleak way for the housing market to come back to form, admitting, “Until people lose their job, lose their income, they’re going to stay in their houses.”
Will Americans Be Pinching Pennies Indefinitely?
Bassman has even more predictions for what he believes will happen to the US economy in the coming year.
“The Fed’s going to keep tightening until they get that unemployment rate up, or at least they’re not going to lower rates until then,” he said. He believes that this will result in “the housing down” and “the stock market down.” Bassman expects many Americans to default on their mortgages and they will be left with no money to put into their retirement accounts.
Even More Money Troubles for Americans
Bassman believes the government’s response to the impending recession will leave Americans reeling. He insists that the economy will continue to suffer as a financial crisis continues to mount in the US.
“The Fed has told us, ‘Inflation we don’t like, we’re going to slam on these brakes until something breaks,’ which is the economy,” he said. “When that happens, bad things will happen to credit. There will be defaults, by definition. That’s how it plays out.”
Preparing For the First Recession in Years
Bassman is firm in his belief that a recession is right around the corner. “I think we’re going to get the recession a year from now,” he declared.
He also insisted that lenders will have no choice but to refinance loans at significantly higher interest rates in 2024. “We’re going to get the inflation down, but it’s still a year away because we have not gone into that maturity wall yet. So, I predict that’s going to happen not until sometime, at best, mid-next year,” he predicted.
Offering a Personal Anecdote to Listeners
On the webcast, Bassman shared a story about how he once dismissed warnings from a well-known American businessman and investor.
“I used to be on a finance committee for one of our kids’ schools. There was this guy, kind of a crazy guy, named Steve Eisman,” he said. When Eisman asked if Bassman worked at Merrill Lynch he offered some advice. Eisman told him, “Sell everything. You’re going bankrupt.” Bassman brushed aside his comments, admitting, “That was a mistake.”
How Immigration May Affect the Economy
Immigration has always been a polarizing political issue in the US, but Bassman encourages Americans to take a closer look at how it impacts the country’s economy when facing the threat of recession.
“You’re welcome to be against immigration. You’re welcome to go and lock the door and have nobody come in,” he said. “But let’s be clear, if you slam the door, you will get inflation and you will have slower GDP (gross domestic product) because you have fewer workers.
