121: Silicon Valley Bank Crash; Does Lower Employment Mean Lower Inflation; Recession 6 Months Away??

In this episode of "Kiss My Assets," Jamison Manwaring and Bart Diehl, the Director of marketing at Neighborhood Ventures, discuss various economic events. They start by talking about the recent takeover of Silicon Valley Bank by the federal government to secure the deposits of its clients. The move provided confidence to other banks and depositors, preventing a potential run on banks. While some regional banks experienced a temporary decline in equity value, the situation seems to be settling.

The conversation then shifts to an article titled "Why The Recession is Always Six Months Away," which explores the state of the economy. The government's stimulus measures have left households and businesses financially strong. However, there are shortages of materials and workers, leading to a mismatch between available cash and resources. This imbalance has contributed to inflation. Some experts predict that the economy will take longer to cool down, resulting in higher-than-expected interest rates for an extended period.

The two also discuss the concept of the "Godot recession," where economists predict a recession will occur in six months, perpetually. Despite the aggressive interest rate hikes by the Federal Reserve, consumer spending remains strong. Demand for housing in places like Phoenix, where Neighborhood Ventures operates, continues to be robust, defying expectations of a decline in value. The strong labor market, with high job growth and low unemployment rates, contributes to concerns about inflation.

The conversation concludes with a discussion on the trade-off between employment and inflation. Elizabeth Warren's questioning of the Fed chair highlights the dilemma of achieving economic stability. The Fed aims to control inflation by increasing unemployment, but this approach may lead to recession. Balancing these factors is crucial to maintain economic equilibrium.

Overall, the discussion revolves around recent economic events, such as the Silicon Valley Bank takeover, inflation concerns, and the interplay between employment and inflation in the broader economy.

Article Referenced: https://www.wsj.com/articles/godot-recession-federal-reserve-powell-d50ba71f

Video Referenced: https://www.youtube.com/watch?v=7Nh9F3BBwSs