Reckless Government Spending Only Enough to Delay Inevitable Recession

investing.com:

Since the beginning of 2022, the media has regularly warned a recession is coming. As we suggested previously, if a recession DID occur, it would be the most well-forecasted recession ever on record.

“While the ‘probabilities’ of a recession in 2023 seem far more significant, what bothers us with the recession/hard landing view is that everyone thinks the same. As Bob Farrell once said, ‘When all experts agree, something else tends to happen.’”

Something else has indeed happened. As discussed in“Signs, Signs, Everywhere Signs,” numerous measures suggest a recession is forthcoming. However, that recession has yet to reveal itself. Such has led to a fierce debate between the bulls and the bears. The bears contend that a recession is still coming, while the bulls are betting more heavily on a “no landing” scenario or, instead, avoiding a recession. Even the Federal Reserve is no longer expecting a recession.

But how is a “no recession” outcome possible amid the most aggressive rate hiking campaign in history, deeply inverted yield curves, and other measures warning of its inevitability?

We find the answer in the “money trail.”

Let’s review the actions to date to keep some consistency in the analysis.

As the economy shut down in March 2020 due to the pandemic, the Federal Reserve flooded the system with liquidity. Simultaneously, Congress passed a massive fiscal stimulus bill. That bill extended Unemployment Benefits by $600 weekly and sent $1200 checks directly to households.

Then in December, Congress passed another $900 billion stimulus bill. That bill again extended unemployment benefits at a reduced amount of $300 per week, plus sending $600 checks to individuals again.

Not to be outdone, after Biden took office, the