(Natural News) The country is not only continuing to suffer economically under President Biden and a Democrat-controlled Congress, but it is now teetering on the verge of collapse, according to a billionaire funds manager who said last week he sees “cracks everywhere.”
In an interview with CNBC’s “Squawk Box” on Thursday, Barry Sternlicht, the chairman and CEO of Starwood Capital, said he believes Americans are facing a major recession if the Federal Reserve proceeds with several more rate hikes as a means of curbing inflation, which is reportedly the central bank’s plan.
“The economy is braking hard,” Sternlicht told the financial news outlet, according to the Daily Caller. “If the Fed keeps this up, they are going to have a serious recession and people will lose their jobs.”
He went on to predict that ongoing Fed rate hikes will cause “cracks everywhere” throughout the economy and in particular in the suddenly fragile housing market as prices have begun to drop, finally, after reaching record highs over the past year (meaning they were overvalued, just like before the 2007-08 “Great Recession” crash).
“This is the steepest increase in rates in history — especially since Volcker – but the background of the country today is so different than when Paul Volker was chairman,” said Sternlicht.
“Look at the housing market, [the Fed has] caused a crash of unprecedented proportions,” Sternlicht told the financial news outlet. “500,000 single family home sells, new sells, is the lowest since 1952. We are going to have a major crash in the housing market, and housing prices are going down. You are seeing housing prices correct.”
He also said an expected Fed rate hike of .75 percent at the central bank’s next meeting in October will hit middle America the hardest.
“Take the consumer that you just mentioned, he is paying higher rent. He is actually paying more for food. And he is paying more for gas,” said the CEO and investor. “They [the Fed] are attacking the economy with a sledgehammer, and they don’t need to.”
Sternlicht is not the only economic analyst who sees a dumpster fire ahead for the U.S. economy and Americans who don’t have mansions on Martha’s Vineyard.
Other analysts have said that the Fed’s actions are necessary in order to dampen demand for goods and services, which is currently driving record inflation.
“My takeaway is that inflation is nowhere near being done, and the Fed has a long way to go. The standard theory since last year has been that the Fed needs to destroy demand. That means putting people out of work. It also means undercutting the housing market. My key assumption is until we see a sustained reversal in home prices, we’re unlikely to see inflation come down significantly,” said Forward Observer’s Mike Shelby in a note to subscribers last week.
“Fed chair Jay Powell is still dealing with the ‘wealth effect,’ where Americans still feel comfortable enough to go out and spend money,” he added. “I’m not seeing demand destruction yet, and this is Powell’s big problem: as long as Americans still feel wealthy enough to go out and spend money like they have been, we’ll continue to see higher inflation.”
“I’m expecting home prices in most markets to see a substantial decline. I think recession fears will kick into overdrive as we get closer to 2023. And as we get closer, consumer demand falls, and the Fed will likely curb inflation – nowhere close to their target rate of 2%, but I do think the Fed will be able to take the edge off and get closer to 5% annual inflation,” Shelby added.
Get ready for the economic shockwave that is coming, thanks to a combination of bad government policy and overspending by Congress.