• Monday, U.S. stocks fell into bear market territory as Wall Street investors fretted about interest rate hikes and inflation.
• The S&P 500 is down more than 20% from its early-year high.
• “According to Krier, the precise definition of a recession is two-quarters of declining US growth.

Monday, U.S. stocks fell into bear market territory as Wall Street investors fretted about interest rate hikes and inflation. Recession

The S&P 500 is down more than 20% from its early-year high.

According to one analyst who spoke with News4JAX, the market typically loses 30% during a recession, thus he believes the country will not enter a recession until at least 2023.

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“But it’s not as bad as everybody thinks here, you know,” said Joe Krier, partner at IIWII Trading. “And the reason that we’re likely to head into recession is because right now we have the opposite of recession, we have growth that’s a little bit out of control.”

According to Krier, the precise definition of a recession is two-quarters of declining US growth. He believes the country is still expanding, just at a slower rate.

He described how the economy became so vulnerable.

“It’s built up because we had COVID. And we had relief packages by both the Trump administration and the Biden administration,” he said. “And that put a lot of cash into people’s hands. And then all of a sudden, the economy starts heating up, and everybody’s got cabin fever on top of that, so they want to go spend that money. And that’s where we’re seeing some runaway inflation now.”

According to Krier, because individuals continue to spend, the Federal Reserve will take steps to slow the economy and discourage people from spending.

“And their primary tool to slow things down is to raise interest rates, which they’ll do tomorrow, and Wednesday. And so the fear is that when they raise rates, they’ll raise them too far,” he said. “But what happens is, it’s harder for companies to do business when interest rates are higher, so their profits shrink, and their stocks go down.”

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Some economists believe the Fed will raise its benchmark rate by three-quarters of a percentage point on Wednesday. That’s three times the normal amount, and it’s something the Fed hasn’t done since 1994.

Because consumers are so rich with cash right now, a recession might occur as late as 2023, according to Krier.