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Hedge fund manager Michael Burry, famous for his predictions of the 2008 financial crisis, says inflation has peaked in the United States, but there will be another spike in inflation. He expects the US economy to be in a recession “by any definition”.
Michael Burry’s economic forecast for 2023
Famed investor and founder of investment firm Scion Asset Management, Michael Burry, has shared his economic forecast for 2023. Burry is best known for being the first investor to forecast and profit from the US subprime mortgage crisis. United States which occurred between 2007 and 2010. It is portrayed in “The Big Short”, a book by Michael Lewis about the mortgage crisis, which was made into a film starring Christian Bale.
Burry tweeted on Sunday: “Inflation has peaked. But this is not the last peak of this cycle. He continued:
We will likely see a lower CPI, possibly negative in 2H 2023, and the US in a recession by any definition. The Fed will cut and the government will stimulate. And we will have another spike in inflation. It’s not hard.
Many people on Twitter agreed with Burry. Attorney John E. Deaton tweeted, “I think that’s correct.” Economist Peter St. Onge wrote, “The smart kids agree: The fall in inflation will be transitory, then the Fed will turn on the money printers and start again.”
Investment scholar Karel Mercx commented, “Michael Burry is right…Inflation usually comes in waves, and there is rarely a wave (see the CPI chart from the 1970s). The five most dangerous words in investing are always: “this time it’s different”.
The Consumer Price Index (CPI) chart shared by Mercx. Source: Twitter.
Investor Kerry Balenthiran agreed with Burry, tweeting: “Okay, but the next inflationary peak could end in a decade or more. This looks a lot like the secular bull market from 1947 to 1965. In this case, it there was post-war inflation which subsided, followed by an inflationary environment which finally peaked in 1980.”
Some people offered alternative views. Former broker Rob Bezdjian, for example, thinks there will be deflation. “I’m going to take the other side of his inflation prediction. We’ll be in deflation for a long time. Bubbles take a very long time to reinflate,” he said.
Burry shared many warnings about the US economy. In November 2022, he warned of “a prolonged multi-year recession”. In May, investor Big Short warned of a looming consumer slump and further earnings troubles. In April, he said the Federal Reserve “has no intention of fighting inflation,” stressing, “The Fed is all about reloading the monetary bazooka so it can come up to the rescue and fund the budget bet.”
Tags in this story big short, Big Short Michael Burry, michael burry, Michael Burry another peak in inflation, michael burry economic forecast, michael burry inflation, michael burry peak inflation, michael burry predictions, recession by Michael Burry, American Economy by Michael Burry, Michael Burry American Recession
Do you agree with Michael Burry on inflation and that the US economy will be in recession? Let us know in the comments section below.
Kevin Helms
Image credits: Shutterstock, Pixabay, Wiki Commons
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