Lacy Hunt: The Stability of the US Economy is at Stake

The Fed is at a crucial junction, according to Lacy Hunt. It must contain inflation. If not, the stability of the U.S. economy over the longer term is seriously in doubt.

The economy faces a recession, he said. The issue is whether the Fed perseveres in its battle to tame inflation, or it puts us in a more difficult and treacherous situation for a longer period of time.

Economic stagnation and more inflation will be the consequences if the Fed fails to address inflation.

Hunt is the executive vice president and chief economist of Texas-based Hoisington Investment Management Co., a firm that manages $5.2 billion for pension funds, endowments, insurance companies, and others. He spoke virtually on May 11 at the Strategic Investment Conference, which was hosted by Mauldin Economics.

Hunt began his presentation with a review of the economic metrics that support his recessionary view.

Hunt cited the misery index, which measures the average of the unemployment and inflation rates. But that index doesn’t reflect the mindset of Americans because it is equally weighted. “Inflation hurts much more,” Hunt said.