CNBC Guest Calls For More People To Lose Their Jobs

( A guest on CNBC warned that consumer spending remains so robust that the Federal Reserve is nowhere near easing its monetary policy tightening.  This is typically bad news for markets because an increase in borrowing costs tends to reduce demand.

The U.S. Bureau of Economic Analysis released revised data for the third quarter on Thursday morning, indicating that GDP grew faster than anticipated.

According to the third estimate published by the Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 3.2% during the third quarter of 2022 (table 1). In the second quarter, the real GDP fell by 0.6%.

Typically, robust GDP figures positively impact the markets, but stocks fell during Thursday’s session, possibly due to concerns that the Fed will accelerate its tightening. Due to low unemployment, the Fed has already raised interest rates seven times this year to rein in inflation levels not seen in forty years.

In the CNBC show episode, Jackie Cavanaugh, portfolio manager at Putnam Investments, stated that she believed the first half of ’23 would be difficult.  She referenced the robust job market and said consumers have “confidence” in this environment. The Fed faces a formidable challenge when consumers account for 70 percent of the economy.  She also claimed that the Fed is far from cutting rates.

CNBC host Joe Kernen inquired whether Cavanaugh believes the current consumer data is good or bad.

Cavanaugh replied that it was good. The Fed desperately attempts to thread the needle of slowing the economy while avoiding a major recession. We will likely experience a moderate recession.

Cavanaugh then called for some labor market slack, referring to unemployed individuals who are not working but could be. The Fed should create some slack in the labor market, but this will take time.

There are slackers and hacks in the White House and throughout the Biden Administration. They’re not helping anything.