Hedge fund manager Michael Burry, famous for predicting the 2008 financial crisis, says US inflation has peaked but there will be another blip. He expects the US economy to be in recession “by any definition”.
Michael Burry’s economic forecasts for 2023
Famed investor and founder of investment firm Scion Asset Management Michael Burry has shared his economic forecasts for 2023. Burry is best known for being the first investor to anticipate and capitalize on the US subprime mortgage crisis that occurred between 2007 and 2010. He is portrayed in The Big Short, a book by Michael Lewis about the mortgage crisis, a film starring Christian Bale.
Burry tweeted on Sunday: “Inflation has peaked. But it’s not the final highlight of this cycle.” He continued:
We are likely to see a lower CPI, possibly negative in 2H 2023 and the US is in recession by definition. The Fed will cut and the government will stimulate. And we will have another inflation spurt. It’s not difficult.
Many people on Twitter agreed with Burry. Attorney John E. Deaton tweeted, “I believe that’s correct.” Economist Peter St. Onge wrote, “The wise minds agree: lower inflation will be temporary, then the Fed cranks up the money printers and does it again.” .”
Investment specialist Karel Mercx commented: “Michael Burry is right… Inflation usually comes in waves and there is seldom a single wave (see 1970s CPI chart). The five most dangerous words in investing are still: ‘This time is different.’”
The Consumer Price Index (CPI) chart was shared by Mercx. Source: Twitter.
Investor Kerry Balenthiran agreed with Burry, tweeting: “Agreed, but the next bout of inflation could end in a decade or more. This is very similar to the 1947-1965 secular bull market. In this case, there was post-war inflation that settled down, followed by an inflationary environment that finally peaked in 1980.”
Some people offered alternative points of view. Former broker Rob Bezdjian, for example, believes there will be deflation. “I’m going to take the other side of his inflation forecast… We’re going to be in deflation for a long time. Bubbles take a long time to inflate,” he said.
Burry has shared numerous warnings about the US economy. In November 2022, he warned of “an extended multi-year recession.” In May, the big-short investor warned of a looming consumer recession and further earnings woes. In April, he said the Federal Reserve “has no intention of fighting inflation,” stressing, “The Fed is only concerned with reloading the monetary bazooka so it can ride to the rescue and fund the fiscal put.”
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Do you agree with Michael Burry on inflation and that the US economy will go into recession? Let us know in the comment section below.
Kevin Helms
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