Hedge fund manager Michael Burry, best known for predicting the 2008 financial crisis, has warned of an impending consumer recession and more earnings problems. He cited falling personal savings and record revolving credit card debt in the U.S. despite trillions of dollars in stimulus.
Michael Bury’s recession warning
Prominent investor and founder of investment firm Scion Asset Management, Michael Burry, warned on Friday of an impending consumer recession and more earnings problems ahead.
He is best known for being the first investor to foresee and profit from the US subprime mortgage crisis that occurred between 2007 and 2010. He was profiled in Michael Lewis’ book about the mortgage crisis, “The Big Short,” which was adapted into a film starring Christian Bale.
Burry explained on Twitter on Friday:
U.S. personal savings fell to 2013 levels, the savings rate fell to 2008 levels — and revolving credit card debt grew at a record pace, back to pre-COVID peaks, even though all those trillions of cash are in their The circle fell. Imminent: a consumer recession and more income issues.
His tweet included two images. The first shows a sharp drop in U.S. personal savings. Another showed a sharp rise in outstanding consumer credit.
At the time of writing, Burry’s tweet has 476 comments, 11K likes, and nearly 2.5K retweets. Many people on Twitter agreed with Burry, thanking him for raising the issue and telling others to heed his warning.
One commented: “This is crazy. We airdropped helicopter money to people, but personal savings went down and credit card debt went back to where it was.”
Another wrote: “Exactly what I said – inflation is not a problem. Consumer debt is a problem. Monetary policy on the demand side is wrong. Rate manipulation failed to correct markets. Save instead of focusing on spending. Kill imports.”
Another user thought:
While the media wants narratives that consumers are powerful, the data says otherwise. Savings are falling, debt is rising and inflation measures are still rising month-on-month, and energy prices are near highs we haven’t seen since 2008.
Some agree that “the numbers don’t lie” and that the U.S. economy looks as dire as Bury says, or worse.
A growing number of people have recently warned that a recession is here or is imminent, including the Tesla CEO Elon Muskrich dad poor dad author Robert Kiyosakiand the senior chairman and former CEO of Goldman Sachs, Lloyd Blankfein.
What do you think of Michael Berry’s warning? Let us know in the comments section below.
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