David Stryzewski, CEO of Sound Planning Group, explains why he thinks the U.S. is in a controlled recession.
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00:00I would say that we're probably heading into a controlled recession.
00:03You know, I think that we're probably heading into something that's maybe more like a strategic reset, you know, call it a shallow recession, maybe even welcome behind the scenes.
00:12I'm not sure, you know, but a market pullback would drive capital into bonds, would lower yields, would give the Fed cover to pivot from quantitative tightening to more quantitative easing.
00:22And that's probably exactly what you would want if you're trying to refinance as much national debt as we have without taking the entire system.
00:30So in my opinion, this is not political.
00:33It's math.
00:34And it's probably necessary.
00:36So as we look at your question here and we talk about a controlled recession, I think that people are concerned about stagflation, you know, a stagnant economy that's followed by inflation.
00:48Now, I do think that we're going to have challenges with GDP because most of our GDP or a lot of our GDP was driven by government spending.
00:56If you print a trillion dollars every 100 days, guess what happens?
00:59A bunch of cash goes into the system.
01:01It turns up the markets.
01:04New things happen.
01:05It's sort of a sugar high answer, though, as opposed to, you know, systemically coming underneath the foundations of things, which is what I think is actually getting eroded.
01:13The actual consumer is 70 percent of our GDP.
01:16That's being eroded.
01:18And so the consumer needs to to figure out how to get, you know, into a position where they're not paying 25 percent on credit cards.
01:26Holy smokes.
01:26That should be illegal.
01:28By the way, credit card debt is unsecured debt.
01:30And so unsecured debt means you can't go into someone's house and take their groceries away or the gas out of the gas tank.
01:36There's nothing like a home or a car to repossess.
01:39And so if what we had right now was the largest credit bubble in the world for credit cards and the consumer just goes, eh, I'm done.
01:47I capitulate.
01:48I quit.
01:49Which is basically what's happening in China right now in their mortgage industry, which is, by the way, the largest sector of any in any economy is the real estate in China.
01:58And they're not paying it anymore because no one's delivering their their their their homes.
02:02But the consumer right now has a lot of debt and they've just been, you know, fighting debt with their their credit card.
02:11And so I'm concerned that we see people get into trouble in that way.