Our opinion is that the U.S. economy is already experiencing negative Real GDP (Inflation and the GDP Deflator are understated by the Federal Government in our view). We believe that the Federal Government’s published GDP figures will eventually show flat-to-negative Real GDP in 2022 as consumers lose confidence and pull back on spending. Double-digit percentage inflation in the cost of food, fuel and rent expense have hit low-to-medium income earners hard. As personal savings accrued from the various Federal pandemic unemployment assistance programs dwindle, consumers will pull back on discretionary goods and services. Thus, while our view is that price inflation will accelerate, inflation does not need to accelerate for consumer confidence and spending to weaken during 2022. The Federal Reserve’s tightening will exacerbate this problem and knock the U.S. economy into a recession this year.

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