The U.S. economy is going to see a resurgence of inflation that will “disrupt everybody’s narratives,” Breitbart Economics Editor John Carney told Fox Business host Larry Kudlow in a Tuesday interview.
Carney pointed to the rising price of oil and shelter as tell-tale signs that inflation will surge again.
“The only reason oil is as cheap as it is is because China has been lagging behind,” Carney explained. “China is about to put a bunch of stimulus into the economy because politically Xi Jinping cannot afford to have the economy be growing as slow as it. So, they’re going to come back. Oil is going to go up, but it’s not just oil. Look at what’s happening to home prices—up four months in a row. So that’s not going to be weighing on CPI much longer… Shelter is about 40 percent of CPI.”
“So, we’re going to have a resurgence of inflation that is going to disrupt everybody’s narrative,” he said. “Everybody said inflation is coming down. I don’t think we have a real reason to believe that inflation will continue to come down from where it is right now.”
Carney predicted that Federal Reserve Chair Jerome Powell will announce a rate hike at the press conference tomorrow following the Federal Open Market Committee meeting.
“We’re heading tomorrow to a hike,” Carney said. “The Fed has signaled that they want to hike one more time. I actually think that what’s going to happen is that when we get a resurgence of inflation in the next couple of months, what we’re going to see is the Fed is going to have to do the thing that nobody in the market expects right now. It’s going to be really disruptive to everything, which is they’re going to have to hike again in the first quarter of next year and people will be shocked.”
Kudlow asked whether the resurgence of inflation could push the economy “to double dip into a second recession next year.”
“I think we will be in a recession next year. The question is when,” Carney said. “Right now, we look like we’re growing two percent. Again, we grew two percent in the first quarter [and] probably 2 percent in the second quarter, we’ll find out later this week. I don’t think we will enter a recession this year. I used to think it was going to be first quarter of next year. But we’re so strong right now on so many things….too strong to actually go negative until probably the second quarter of next year.”
“So, I keep pushing this back, which seems ridiculous because we keep saying the recession is coming. It’s just not coming yet,” he concluded.
In Monday’s Breitbart Business Digest, Carney pointed to last weekend’s blowout Hollywood box office for Barbie and Oppenheimer as yet another indication that the American consumer is eager to spend money—and also a reason for why the Fed will need to hike interest rates to tame the inflationary pressures brought on by all of this consumer activity. Carney dubbed this week’s expected Fed rate hike as the “Barbenheimer Hike.”
“These [box office figures] are not the kind of numbers you would expect from a public leery of an economic downturn,” Carney wrote. “There’s no indication of the kind of defensive savings that often hasten or exacerbate a recession. The ticket sales are suggestive of a household sector that is still spending freely, eager to enjoy a summer free from excess deaths, masking and distancing requirements, and sky-high gas prices.”
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