What does a Fed pivot mean? A Fed pivot is when the Federal Reserve goes from being afraid of inflation to being afraid of recession. Almost half the time, a recession occurs after they lower rates which is contrary to what many folks believe.
How could I be wrong this time about a recession?
If AI proves to be a distruptive force in 2024 and productivity increases allow inflation to come down without a disruption to the labour market, then yes. Theoretically, this is possible but the odds are still stacked against them. Whatever happened to the internet being a disruptive force during the dotcom bust? It didn't happen and the economy did slip into a recession by March 2001.
My base case has never wavered and I believe the house of cards will crumble at the precise moment the Fed pivots. The government has an insurmountable debt that has to be addressed which is why Janet Yellen can't have rates high for this long. The problem with easing Monetary policy is that if a recession is truly averted, inflation could begin to ramp up which fits with the narrative, "extend and pretend" everything is going to be just fine.
I don't think so.