St. Louis Fed President James Bullard on Wednesday said he thinks the U.S. economy is more resilient than many investors have thought.
“I think markets have overpriced a recession in the second half of 2022 and overpriced a recession in the first half of 2023 and maybe they are overpricing the chances of a recession in the second half of 2023,” Bullard said in an interview on CNBC.
He noted that the Chinese economy was coming back from COVID lockdown and the European economy is stronger than expected.
“It kind of seems like the U.S. economy might be more resilient than markets thought, let’s say, six to eight weeks ago,” he said.
Bullard said he forecast moderately slow growth with inflation declining in 2023.
“We have a good shot at beating inflation in 2023,” he said, with the Fed focused on inflation and Congress focused on deficit reduction, he added.
The yield on the 2-year Treasury TMUBMUSD02Y, 4.674%, which is sensitive to Fed interest-rate expectations, on Tuesday hit the highest level in nearly 16 years.
Bullard said his peak rate continues to be 5.38% (or a range of 5.25 – 5.5%) He told reporters last week that he would revisit this estimate after the January PCE data is released on Friday.
The S&P 500 SPX, -2.00% slumped by the most this year on Tuesday. Stock futures ES00, +0.16% on Wednesday were steady.