Epoch Times - A NEW GREAT RECESSION?
Aired: 2022-05-03
Duration: 02:04


=== Predicting A Recession (02:04) ===

[00:00:00]  Now you're predicting a recession ahead.
[00:00:02]  Tell us why you're predicting a recession.
[00:00:05]  The reason we are confident that a recession is going to take place is that the Federal Reserve Board is contracting the money supply.
[00:00:14]  They're doing a number of things.
[00:00:15]  Increasing interest rates.
[00:00:16]  And we believe it will not be long before it begins using open market operations.
[00:00:22]  Namely, selling bonds in the open market.
[00:00:25]  Both government bonds and mortgage bank securities.
[00:00:30]  We have never had a time in over the last 50 years where the Federal Reserve Board has started contracting to fight an inflation.
[00:00:41]  It's always led to a recession.
[00:00:44]  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.
[00:00:55]  That's never happened.
[00:00:56]  It has always led to a recession.
[00:00:59]  How do you think this recession will impact California?
[00:01:03]  So one thing that's going to happen is housing prices will begin to decline.
[00:01:07]  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.
[00:01:18]  That's going to have a much more dramatic impact in California because our housing prices are higher.
[00:01:24]  Not only are they higher, but when they are higher, the degree of drop or decline is greater.
[00:01:32]  The other is that California income, a larger proportion of it than other states, is in capital gains income.
[00:01:40]  Those are profits from equities and selling real estate.
[00:01:44]  Given the fact that there will be this adjustment in equity prices, lower home prices and lower equity values as well.
[00:01:53]  There won't be as much in the way of capital gains income.
[00:01:57]  People won't be making the profits they've been making.
[00:02:00]  And California tends to make more in profits because there's more wealth.