Despite the massive selloff in equities this year and persistently high inflation, Dawn Fitzpatrick isn’t worried about a recession in the immediate future. 

The chief executive and chief investment officer of Soros Fund Management argues the US consumer is in “extraordinarily” good shape, which will help the economy weather the Federal Reserve’s expected rate hikes. And while wage growth isn’t keeping up with inflation, Americans are still flush with enough cash to pay down their credit card balances. 

Dawn Fitzpatrick, the custodian of billionaire George Soros’s wealth, doesn’t disagree with that—for the most part.

During a recent interview with investor David Rubenstein on his Bloomberg Wealth talk show, she said inflation and rising interest rates are making a recession “inevitable,” but the market is missing something.  

“The consumer right here is in extraordinarily good shape,” said Fitzpatrick, the CEO and CIO of Soros Fund Management, which is now operated as a family office after a legendary run as a hedge fund.

In the interview, taped at the end of April and released on Tuesday, Fitzpatrick laid out several important factors that she says could lead to a relatively moderate recession for the average U.S. consumer. And while Fitzpatrick said she thinks a recession is all but guaranteed, she disagrees with market predictions that a severe downturn will hit as early as next year.

The executive added: “The one caveat I would say is … climate impact is going to become increasingly focused so, in that context, I think ethereum is likely to gain some more traction over bitcoin.”

She also noted, “the blockchain technology is going to have some great applications.”

The Soros Fund Management chief shared her thoughts on reports that the U.S. economy shrank in the first quarter of this year. “When you look at that GDP number, I think the really important point is the reason it shrank is because of net imports, which were negative, which means we are importing a lot of goods from abroad. And that’s because consumer and corporate demand is robust. So I think there’s a silver lining in the reading of that GDP number,” she explained.

Replying to a question about whether she thinks a recession is coming, Fitzpatrick said:

There’s a lot of discussion about a looming recession and the bottom line is a recession is inevitable. It’s a matter of when.

Unlike past recessions, many American consumers continue to benefit from a large pool of savings built up during the pandemic era’s fiscal stimulus programs. This means that many Americans have so far been able to keep up with their payments, despite inflation causing prices for goods and services in the U.S. to rise an average 8.3% this year.

Americans’ increased savings this year comes despite wage hikes failing to keep up with inflation, Fitzpatrick said. Many companies have been upping wages this year, but not enough for some employees to cope with rising prices, which is leading to some early evidence that U.S. consumers’ pandemic-era savings are starting to be chipped away. 

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