Larry Busacca
All the inflationary factors that were present in September and October and that made Ken Griffin pessimistic about the U.S. economy in terms of inflation have dissipated, he said.
Like the S&P 500 (SP500) hit a new all-time high yesterday — reaching 4929 — some The economic anxiety of last year’s fourth quarter is now behind us, Citadel’s CEO said Tuesday at the MFA Network conference in Miami.
“Good employment numbers, good GDP growth and, most importantly, inflation that is moderating at a rate that is frankly better than what the market was expecting,” he said, adding that the economy could experience a “soft landing”, or even a “no landing”, according to forecasts. The Fed is starting to lower rates.
We could be looking at inflation at the lowest level two this year, unemployment figures “up slightly” and rate cuts as early as this summer, he said.
Griffin, who previously said he might consider another rate hike this year, said that probably wouldn’t happen.
“Clearly, there could be an exogenous shock, like an oil price shock, that would bring inflationary pressures back into the economy,” he said. “But here and now…inflation is falling, core inflation is falling, and that gives the Fed room to stop raising rates and potentially start cutting them.”
The real trick, he added, is how to cut rates before a recession and come out on top.
One of the things that is different about this economic cycle, he said, is “the reckless level of federal spending that creates a very different backdrop for the economy (compared to) any time in the previous history.
Given how the economy is doing, “one would expect the federal deficit to be close to 2 to 3 percent,” he said. “In the Clinton era, we had a surplus when the economy looked like it does today. »
The current federal deficit is 6.19%. It was 14.69% in 2020, 11.76% in 2021 and 5.34% in 2022.
“This government spending needs to be brought under control,” he said. “It’s creating a bit of euphoria right now, but it will come with a hangover.”
