Hedge fund manager Michael Burry, famous for predicting the 2008 financial crisis, warned of an impending consumer recession and further earnings problems. He cited falling US personal savings and record-breaking revolving credit card debt despite trillions of dollars in stimulus money.
Recession Warning from Michael Burry
Michael Burry, famous investor and founder of investment firm Scion Asset Management, warned on Friday of an impending consumer recession and more earnings problems ahead.
He is best known as the first investor to anticipate and profit from the US subprime mortgage crisis that occurred between 2007 and 2010. It is featured in Michael Lewis’ book “The Big Short” about the mortgage crisis. A movie starring Christian Bale.
Burry announced on Twitter on Friday:
US Personal Savings dropped to 2013 levels, savings rate to 2008 levels – revolving credit card debt peaked at a record-breaking rate despite all those trillions of cash falling in its rounds. Coming: a consumer recession and more earnings problems.
His tweet has two pictures. The first shows a sharp decline in US personal savings. The other shows a sharp increase in outstanding consumer loans.
At the time of writing, Burry’s tweet, which received 11 thousand likes and almost 2.5 thousand retweets, received 476 comments. Many agreed with Burry on Twitter and thanked him for raising the issue and telling others to heed his warning.
One commented: “This is wild. We sent helicopter money over people, and yet personal savings dwindled and credit card debt was immediately restored.”
Another wrote: “Exactly as I said – inflation is not a problem. Consumer debt is a problem. Demand-side monetary policy is flawed. Rate manipulation fails to correct the market. Americans printed cash. Instead of focusing on spending, focus on long-term savings. Kill the imports.”
Another user said:
While the media wants the narrative to be that the consumer is powerful, the numbers say otherwise. Decreasing savings, rising debt, and inflation metrics that continue to rise month-on-month as energy prices are near the highest we’ve seen since 2008.
Few agreed that “the numbers don’t lie,” and the U.S. economy looks as dire as Burry suggests or worse.
A growing number of people have recently warned that a recession is either here or imminent, including Tesla CEO Elon Musk, Rich Dad Poor Dad Author Robert Kiyosaki, and Goldman Sachs senior chairman and former CEO Lloyd Blankfein.
What do you think of Michael Burry’s warning? Let us know in the comments section below.
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