May 3, 2022 - Epoch Times
02:04
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| Time | Text |
|---|---|
| Now you're predicting a recession ahead. | |
| Tell us why you're predicting a recession. | |
| The reason we are confident that a recession is going to take place is that the Federal Reserve Board is contracting the money supply. | |
| They're doing a number of things. | |
| Increasing interest rates. | |
| And we believe it will not be long before it begins using open market operations. | |
| Namely, selling bonds in the open market. | |
| Both government bonds and mortgage bank securities. | |
| We have never had a time in over the last 50 years where the Federal Reserve Board has started contracting to fight an inflation. | |
| It's always led to a recession. | |
| They've never orchestrated what economists call a soft landing, where they're able to get rid of the inflation without leading to a recession. | |
| That's never happened. | |
| It has always led to a recession. | |
| How do you think this recession will impact California? | |
| So one thing that's going to happen is housing prices will begin to decline. | |
| Our forecast calls for a decline in housing prices in the third quarter, fourth quarter about 10%, third quarter maybe 5%, and probably even more depreciation next year. | |
| That's going to have a much more dramatic impact in California because our housing prices are higher. | |
| Not only are they higher, but when they are higher, the degree of drop or decline is greater. | |
| The other is that California income, a larger proportion of it than other states, is in capital gains income. | |
| Those are profits from equities and selling real estate. | |
| Given the fact that there will be this adjustment in equity prices, lower home prices and lower equity values as well. | |
| There won't be as much in the way of capital gains income. | |
| People won't be making the profits they've been making. | |
| And California tends to make more in profits because there's more wealth. |
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