As household wealth dropped by a record $6.1 trillion in the second quarter, the CEO of a luxury furnishings shop deemed it “insane” to believe that the US economy is not in recession.
“I don’t know, everyone keeps asking, will we be in a recession? We are in a recession,’ stated Gary Friedman, CEO of RH, formerly known as Restoration Hardware, on a Thursday investor call.
Anyone who believes we are not in a recession is insane. The housing sector is just about to enter a slump. Therefore, the next 12 to 18 months will likely be challenging in our industry,’ he said.
The US economy shrank for two consecutive quarters in the first half of 2022, which is one informal indicator of a recession, but President Joe Biden continues to assert that the economy is robust.
“I don’t know, everyone keeps asking, will we be in a recession? We are in a recession,’ stated RH CEO Gary Friedman on a Thursday conference call.
In the first half of 2022, the US economy contracted for two consecutive quarters, which is one informal indicator of a recession.
The subject has become highly politicized, with Biden highlighting the healthy employment market as a sign of strength and his critics noting rising inflation and sluggish growth as indications that a recession has already begun.
Despite his dire warning, Friedman remained optimistic on Thursday’s earnings call, and the company’s stock gained 4.4% on Friday.
Like, we have endured storms before. We have had recessions in the past. Friedman stated that the Great Recession has occurred previously. We understand what to do. We are adept at playing this game.
As with other furniture shops, RH has been severely impacted by inflation, which has dramatically reduced discretionary spending as consumers allocate more of their household budgets to necessities like food and gas.
Due to the Federal Reserve’s aggressive course of interest rate hikes, Friedman predicted that a recession of some scale would occur.
In its war against inflation, the Federal Reserve has raised its policy rate four times in a row, from near zero in March to 2.5 percent as of this month, and is set to undertake another massive increase later this month.
The central bank is attempting to reduce inflation without collapsing the economy, a path that narrows with each piece of poor economic news.
President Biden continues to assert that the economy is robust, citing the robust job market as evidence.
As the bear market took out trillions of dollars in savings last month, the Fed sent out a bad signal on Friday with a report indicating that household wealth fell by a historic amount.
Total household wealth in the United States, defined as assets minus debts, fell to $143.8 trillion at the end of June, down from $149.9 trillion at the end of March. This was the second consecutive quarterly fall.
The Fed’s quarterly survey of the national balance sheet revealed that the $6.1 trillion quarterly decrease was the greatest ever.
in the second quarter to its lowest level in a year as a bear market in stocks offset improvements in real estate values, according to a data released by the Federal Reserve on Friday.
From a record $150 trillion at the end of 2021 through June, the total wealth of the United States fell by more than $6.2 trillion.
As a result of the COVID-19 pandemic’s disruption of financial markets, the net decrease in wealth in the second quarter was almost $30 billion more than the previous record decline made two years prior.
Total household wealth in the United States, defined as assets minus debts, fell by a record $6.1 trillion in the second quarter, primarily owing to stock market drops.
However, the fall in the second quarter of 2020 is still the highest in terms of percentage, at 5.2% compared to 4.1% in the most recent report.
The most recent collapse was led by a $7.7 trillion decline in stock market prices as the first half of the year ushered in a bear market.
The markets fell substantially in the first half of the year due to concerns about rising inflation and the Federal Reserve’s strong response of raising interest rates.
The losses on the stock market exceeded the $1.4 trillion increase in real estate values.
The annual growth rate of household debt dropped to 7.4% from 8.3% in the first quarter of the year, but company, federal, state, and local government debt levels all increased.
In the second quarter of 2022, the federal government’s debt grew at an annual pace of 5.6%, down from 10.2% in the previous quarter.