Will central bank battles against inflation definitively push us into economic decline?
Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by the International Business Times in an article — by Panos Mourdoukoutas, “What Could Save The US Economy From A Recession In 2023” — regarding what could steer the U.S. away from a seemingly imminent Federal Reserve induced recession.
Several scenarios could pull the U.S. and the world away from global recession in 2023:
- A solid restart to China’s economy after Lunar New Year celebrations and the second COVID wave that will follow everyone returning to work
- An end to Russia’s terrible war against Ukraine
- If Christine Lagarde of the European Central Bank (ECB) and her counterpart Jerome Powell at the Federal Reserve were to suddenly pivot and lower interest rates, the stimulus created would probably swerve the global economy away from a recessionary trajectory
- Because energy prices are a significant cost factor for most production and services industries, a solid drop in oil or electricity production prices—for almost any reason—would pull the global economy away from recession
Quoted article excerpts are below:
Michael Ashley Schulman, the chief investment officer of Running Point Capital Advisors, sees a couple more scenarios that could avert a global recession.
One is a solid restart to China’s economy after the Lunar New Year celebrations.
“If China continues to stimulate and reopen its economy, global commodity demand should increase, and simultaneously, finished goods prices should decrease as supply chains normalize,” he told International Business Times.
“Some of China’s recent moves to stabilize their real estate mess are reminiscent of the U.S. Troubled Asset Relief Program program during the great financial crisis of 2008-09 that stabilized the financial system in the U.S.”
Then there is the prospect of ending Russia’s war against Ukraine. It has been an innumerable strain on all economies involved and incalculably inflationary.
“A peaceful resolution to the terrible conflict would decrease risks, lift stock markets, and make global financing cheaper,” Schulman said.
“It will end a European migrant crisis, lessen energy prices, and increase food security — results that could help mitigate recessionary fears.”
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-77