#1063 Darius Dale Gives The Truth On How Bad The Economy Is
7/29/2022 · 32 min · transcript via mlx
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Key topics
— Federal Reserve raised rates 75 basis points; Powell signaled this may be the last such hike, with future moves data-dependent rather than guided.
— Labor market shows persistent strength: job openings exceed unemployed 1.9x, quits rate at 3.1%, employment cost index at 4.5%—all well above pre-COVID trends.
— Labor force participation remains depressed across all cohorts (headline down 120 bps, prime working age down 80 bps), which may delay typical recession-driven job shedding.
— Two consecutive quarters of negative GDP growth meet the technical definition of recession, though administration and Fed dispute this—highlighting definitional disagreement over what constitutes an official recession.
— Core inflation continues accelerating on three-month annualized basis despite headline CPI moderating; sticky inflation remains elevated.
— Housing market "destroyed" and unlikely to recover until post-recession; leading indicators collapsing at fastest pace outside April 2020.
Market & price signals
— Bitcoin and cryptocurrencies up 20–40% (some 80%) off recent lows in past 48–72 hours despite persistent headwinds. Fed's removal of forward guidance and acknowledgment of economic deterioration seen as modest positive signal, though sustainability questioned. Treasury market dysfunction evident in elevated MOVE index and REPO fails, signaling financial instability not yet severe enough to concern Fed.
Actionable insights
— Position defensively for recession likely by end of 2024 or early 2025; markets have not fully priced in economic contraction despite negative GDP prints and deteriorating corporate profit cycle.
— Monitor labor force participation and corporate hiring cycles rather than waiting for NBER recession call; market participants can analyze data independently to time entry and exit points around macro inflections.
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