Steel Summit: Dr. Basu Says “You Can’t Handle the Truth!” of a Recession

A major theme in the presentation, Dr. Basu reiterated that “the war on inflation continues.” Interest rates are running high with the potential to rise even further. “Can [the Fed] engineer a soft landing or is it Mission Impossible?” he quipped.

That war has not yet been won because of a red-hot labor market with record levels of employment, Dr. Basu said. And although the US economy is hot with significant momentum, there’s still an inflationary environment.

Some other highlights from Dr. Basu’s presentation?

• You Had Me at Recession – Defining a recession is hard with Eyes Wide Shut. Although we’re not in a recession now, many “measures suggest quite strongly that a recession is quite likely.”
• The Firm – firms emphasizing cost cutting, announcing layoffs.
• A Few Good Properties – high mortgage rates, low interest in home buying, weakness in multi-family residential construction.

Dr. Basu predicted a recession is coming in the next 12 months. “It’s going to get worse before it gets better. … Maybe you disagree because ‘You can’t handle the truth!’” he said.

In a question and answer session, Dr. Basu agreed with many in the audience that the Inflation Reduction Act is not really having a significant impact on inflation. “It’s largely an alternative energy act,” he commented.

The 2023 SMU Steel Summit continues through Wednesday afternoon. Tuesday morning will feature a presentation “From Washington to Your Workplace” by author and columnist Gene Marks. The conference ends Wednesday afternoon after a “Prepare for 2024” talk from economist Dr. Alan Beaulieu.