Andrew Balls from investment firm PIMCO has warned about the possibility of a recession in the United States, with Europe likely to face a similar situation.
“A recession is not the only important thing. You’re clearly going to see a significant growth slowdown,” Balls said.
“The inflation profile in the short term is very important. Central banks are focused on inflation credibility.” He described the rate hikes by the U.S. Federal Reserve as “reasonable.”
Balls also predicted Europe will be in a recession, with chances being a bit higher than in the United States. In Europe, Balls expects rates to be hiked as planned. “But it’s really not clear that they get as far as the market is pricing in,” he said.
Profit Recession and Employee Terminations
Amid talks of economic recession, some experts are also warning about profit squeeze within American businesses.Pomboy calls this her “profit proxy.” In the last year, the gap between CPI and PPI has widened, implying “the most acute margin squeeze since the 1970s,” she said.
The readings imply a looming “profit recession” for American businesses. “It’s not only forecasting a profit recession, it’s forecasting the worst profit recession in 50 years,” she added.
Cryptocurrency firm Coinbase announced plans to terminate about a fifth of its workforce, amounting to 1,100 employees, in mid-June. Netflix is laying off 300 workers, and real estate firms Redfin and Compass announced staffing cuts of 8 percent and 10 percent, respectively.