Hedge fund manager Michael Burry, famed for forecasting the 2008 financial crisis, says inflation has peaked in the U.S. but there will be another inflation spike. He expects the U.S. economy to be in a recession “by any definition.”
Michael Burry’s 2023 Economic Predictions
Famous investor and founder of investment firm Scion Asset Management, Michael Burry, has shared his 2023 economic predictions. Burry is best known for being the first investor to foresee and profit from the U.S. subprime mortgage crisis that occurred between 2007 and 2010. He is profiled in “The Big Short,” a book by Michael Lewis about the mortgage crisis, which was made into a movie starring Christian Bale.
Burry tweeted Sunday: “Inflation peaked. But it is not the last peak of this cycle.” He continued:
We are likely to see CPI lower, possibly negative in 2H 2023, and the U.S. in recession by any definition. Fed will cut and government will stimulate. And we will have another inflation spike. It’s not hard.
Many people on Twitter agreed with Burry. Lawyer John E. Deaton tweeted: “I believe this is accurate.” Economist Peter St. Onge wrote: “The smart kids agree: lower inflation will be transitory, then Fed cranks up the money printers and does it again.”
Investment specialist Karel Mercx commented: “Michael Burry has a point … Inflation usually comes in waves, and there is rarely one wave (see 1970s CPI chart). The five most dangerous words in investing are still: ‘this time it is different.'”
Investor Kerry Balenthiran concurred with Burry, tweeting: “Agreed, but the next inflationary spike could end in a decade or more. This is very much like the 1947 to 1965 secular bull market. In that case, there was a post-war inflation that quietened down, followed by an inflationary environment that ultimately peaked in 1980.”
Some people offered alternative viewpoints. Former broker Rob Bezdjian, for example, believes there will be deflation. “I will take the other side of his inflation prediction … We will be in deflation for a long time. Bubbles take a very long time to re-inflate,” he opined.
Burry has shared numerous warnings about the U.S. economy. In November 2022, he warned of “an extended multi-year recession.” In May, the Big Short investor cautioned about a looming consumer recession and more earnings trouble. In April, he said the Federal Reserve “has no intention of fighting inflation,” emphasizing: “The Fed’s all about reloading the monetary bazooka so it can ride to the rescue & finance the fiscal put.”
Do you agree with Michael Burry about inflation and that the U.S. economy will be in a recession? Let us know in the comments section below.