Investing Expert Calls Economy ‘Pretty Damn Good Right Now’ — But Warns of 2 Risks
Written by
Adam Palasciano
Edited by
T. Woods
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The onset of the COVID-19 pandemic in 2020 spurred serious economic change not seen in decades. Unemployment jumped, inflation skyrocketed and housing costs reached new heights. Now fast-forward to 2024: Previous redessionary fears seem to be diminishing, and professionals like Citadel CEO Ken Griffin are feeling relieved.
In fact, Griffin recently explained to CNBC that the economy is doing well and a soft landing — part of the normal econimic cycle in which a slowdown of economic growth occurs, one which avoids recession — could happen this year. Recent economic data has indicated healthy GDP growth, inflation moderating at a better pace than expected and a solid labor market. Inflation could even reach a low of about 2% by the end of 2024.
“The [Federal Reserve] can start to cut rates come this summer, and we will see unemployment touch up a little bit. But the overall economy looks pretty damn good right now,” enthused Griffin.
However, he advised that some risks could jeopardize that economic soft landing. Here’s what to look out for:
1. Unchecked Government Spending
As Griffin notes, the current level of increased government spending has resulted in an economy that “feels good” at the moment, but could come at a cost later. He suggests that government spending needs to be checked so that the U.S. economy doesn’t experience a financial “hangover” that could come as a consequence of unneccessary government expenditures.
2. Tensions Between Taiwan And China
Griffin also noted his concern for the increased tensions currently happening between China and Taiwan. He asserts that it is in our best interests as a country to protect Taiwan’s economic security, as the island nation’s semiconductors are extremely important to many U.S. companies. He predicts that the U.S. GDP could take a massive (8% to 10%) hit if it were to lose access to these Taiwanese semiconductors.
As Griffin explained, the U.S. economy is currently on the up and up, but it’s crucial to take these risks into account when forecasting what comes next — should either of these risks be triggered, the possibility of a subsequent recession can’t be excluded.
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