Neil Dutta, an economist at Renaissance Macro, predicts a looming recession in 2025, breaking down the troubling indicators of the labor market and inflation. He discusses the roles of tariffs and wages in shaping the economic landscape, alongside the impact of rising oil prices. Dutta also weighs in on the Federal Reserve's strategies ahead of their upcoming FOMC meeting and shares insights on how the long bond might react to a recession. His practical approach sheds light on the complexities of our current economic climate.
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insights INSIGHT
Why 2025 Recession Is Imminent
The 2022 recession was avoided due to strong labor markets and excess savings supporting spending.
Now, without excess savings and slowing labor markets, recession risk in 2025 is higher due to diminished buffers and surprise growth downgrades.
insights INSIGHT
Recession Depth and Fiscal Deficit
A stable fiscal deficit does not stimulate GDP growth; changes in deficit levels matter more.
Expect a shallow but prolonged recession driven largely by a significant confidence shock, not deep imbalances.
insights INSIGHT
Tariffs Impact on Inventory and Economy
Import surges mainly involve pharmaceuticals, not broad consumer inventories, so store shelves may not be well stocked.
Supply shocks from tariffs take time to ripple through the economy, delaying full impact on employment and prices.
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In this episode, Neil Dutta from Renaissance Macro joins the show to discuss why he didn’t call for a recession in previous years but IS calling for one in 2025, why the labor market is looking bleak, and how tariffs, wages, and oil play into the inflation outlook. We also delve into what the Fed should be doing headed into the FOMC meeting, Fed independence & the future Chairman, how the long bond will react to a recession, and more. Enjoy! — Follow RenMac: https://x.com/RenMacLLC Follow Felix: https://x.com/fejau_inc Follow Forward Guidance: https://twitter.com/ForwardGuidance Follow Blockworks: https://twitter.com/Blockworks_ Forward Guidance Newsletter: https://blockworks.co/newsletter/forwardguidance Forward Guidance Telegram: https://t.me/+CAoZQpC-i6BjYTEx — Join us at Permissionless IV June 24th - 26th. Use code FG10 for 10% OFF! https://blockworks.co/event/permissionless-iv — Blockdaemon is the gateway to the decentralized economy, securing over $110B in digital assets for 400+ institutions with blockchain nodes, APIs, MPC wallets and vaults, and staking solutions. Learn more: www.blockdaemon.com At Ondo, we design institutional-grade platforms, assets, and infrastructure to bring financial markets onchain. We believe that combining the best of TradFi with the best of DeFi will dramatically improve our financial system—making it fairer, faster, and more accessible to all. Learn more about how Ondo is bringing capital markets onchain at https://ondo.finance/ Ledger, the world leader in digital asset security for consumers and enterprises, proudly sponsors Forward Guidance, where traditional finance meets crypto. As Ledger celebrates a decade of securing 20% of the world’s crypto assets, it offers a secure gateway for those entering digital finance. Buy a LEDGER™ device today and protect your assets with top-tier security technology. Buy now on https://Ledger.com. — Timestamps: (00:00) Introduction
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