Jeffrey Gundlach: 6 Signs Recession Is Near, or Here

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In the post-pandemic period, many traditional recession indicators have been inaccurate or lagged, partly due to the extra money pumped into the U.S. economy during the COVID lockdown, DoubleLine Capital CEO and Chief Investment Officer Jeffrey Gundlach noted Tuesday.

Nonetheless, several signs indicate the economy is near a recession if not in one already, Gundlach suggested in his quarterly webcast.

He also cited evidence to support expectations for a 50 basis-point cut to the Federal Reserve benchmark interest rate when the central bankers meet next week.

As Reuters reported, traders now see less than a 20% chance for a 50 basis-point rate cut, a decline in expectations that happened after new data Wednesday indicated core inflation rose 3.2% year over year in August and shelter costs accelerated for the first time in 17 months.

The federal funds rate typically follows the the 2-year Treasury. Recently the fed funds rate was 5.5% while the 2-year was at nearly 3.7%, Gundlach noted.

“There’s this huge gap between the fed funds rate and where the 2-year Treasury is guiding. So no wonder the market is talking about the potential for a 50 basis-point cut,” Gundlach said.

Declining inflation also could support such a rate cut, he added.

Here are six signs that Gundlach said point to a coming, or current, recession.