Financial experts are concerned about the continued interest rate hikes in the US, as recent announcements from the Federal Reserve seem to be pushing for them, despite inflation slowing down in July.

“We will have a recession because we’ve had five months of zero M2 growth – money supply growth and the Fed isn’t even looking at it,” said Steve Hanke, a professor of applied economics at Johns Hopkins University, in an interview with CNBC on Monday. “We’re going to have one whopper of a recession in 2023.”

As of now, the National Bureau of Economic Research analysts do not consider the US to be in a recession.

However, many economists, analysts, and research experts believe that the US may witness a recessionary scenario soon. Fed rate hikes are going to continue until inflation gets controlled, which is likely to bring more pain to the economic conditions in the US.

Steve Hanke said this week that he believes the US is heading for a “whopper” of a recession next year. In an interview with CNBC’s “Street Signs Asia” on Monday, Hanke argued that a major economic downturn had been made inevitable due to US money supply soaring and stagnating.

“We hit the bull’s eye with that model,” Hanke said Monday, referring to his inflation simulations. “Now the model is running at between 6% and 8% for the end of this year on a year-over-year basis, and 5% at the end of 2023 going into 2024.”

The Federal Reserve aims to keep inflation at around 2% and has been trying to reduce inflation this year without triggering a recession. However, Powell himself warned last week that American households and businesses should brace for “some pain” as the central bank’s efforts to bring inflation under control were “likely to require a sustained period of below-trend growth.”

Whether the US economy falls into a true recession or a “growth recession,” or avoids a recession altogether, may still be up for debate, but there are clear signs that the US economy’s strength is fading. Gross domestic product (GDP) growth forecasts across Wall Street have been repeatedly cut in recent months. Goldman Sachs now expects US GDP growth of just 1.6% in 2022, down from 2.4% in May. And the Conference Board slashed its forecast for US real GDP growth in 2022 to just 1.3% in August.

“The Conference Board forecasts that economic weakness will intensify and spread more broadly throughout the US economy in the second half of 2022 and expects a recession to begin before the end of the year,” researchers at the nonprofit wrote earlier this month.

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