Billionaire Barry Sternlicht, chairman and CEO of Starwood Capital Group, warned that the US economy will collapse and stressed that interest rates must be lowered. He further stressed that the economy is “going to have a hard landing.”
Barry Sternlicht on hard landing and economic collapse
Billionaire Barry Sternlicht, chairman and CEO of Starwood Capital Group, discussed the state of the U.S. economy in an interview with CNBC on Thursday.
Following the Federal Reserve’s 25 basis point (bps) rate hike on Wednesday, Sternlicht reiterated that the Fed should have stopped raising rates because of the banking crisis. Several major banks have recently failed, including Silicon Valley Bank and Signature Bank.
“I think we have to lower interest rates. That would recapitalize the banks. I think they have done enough,” Sternlicht opined, adding:
The bond market tells you what will happen. The bond market is right. Interest rates must be lowered. The economy will collapse
Last week, billionaire Jeffrey Gundlach, the “Bond King,” also explained that the bond market is sending signals that the Federal Reserve will soon cut rates significantly.
Claiming that Federal Reserve Chairman Jerome Powell is “using a steamroller to kill a little fly to lower the price of milk by two cents,” the Starwood Capital CEO stressed: “Watch a car going 8,000 miles per hour hit a wall. We don’t need to. He cautioned:
The economy is “landing hard.”
While some believe there will be a hard landing in the U.S., others expect a soft landing, or no landing. Recently, economist David Rosenberg examined the Federal Reserve Bank of Philadelphia’s outlook for the manufacturing economy since 1968 and concluded that the United States appears to be headed for a “hard landing.”
Many, including Gundlach, believe that the Fed will cut rates in the very near future. However, Fed Chairman Jerome Powell said that a rate cut is not in the Fed’s base case, stressing that inflation is still too high. Meanwhile, economist and gold bug Peter Schiff warns that inflation will get much worse and the cost of living for Americans will rise substantially.
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