Michael Burry, the fund manager of “The Big Short” fame, accused the Biden administration of moving the goalposts on what constitutes a recession – and denying the US economy is days away from officially being in one.
“The White House would like you to redefine a recession as one in which consumers are not borrowing on credit cards to pay for inflation, and neither is the labor force inadequate for the size of the economy,” he tweeted on Sunday.
“GDP out Thursday, not that there’s anything wrong with that,” Burry added.
Burry attached a screenshot of a recent White House blog post to his tweet. The post asserted that a recession isn’t simply two consecutive quarters of declining GDP; it’s determined by a holistic analysis of real income, real spending, industrial production, and employment data.
The White House went on to brush off recession fears in its post. It pointed to real income growing despite high inflation, thanks to a historically strong labor market and ample household savings. Burry’s tweet indicates he took particular issue with that argument.
His view appears to be that Americans are racking up credit-card debt to cover rising living costs, and unemployment is low because the economy has outgrown the national workforce. His tweet also suggests he expects GDP data on Thursday to confirm the economy is in a recession, and he sees the White House’s blog post as an attempt to deflect the impending wave of criticism.
The investor and financial historian has previously warned that consumers are saving less, borrowing more, and on track to virtually exhaust their savings by Christmas, as they contend with higher food, fuel, and housing costs.
His stated concerns about consumer spending and labor shortfalls underscore why he doesn’t buy the Biden administration’s claim that incomes, spending, production, and employment data are in rude health, and therefore a recession isn’t on the cards.
Burry shot to fame after placing a contrarian bet against the mid-2000s housing bubble, which was chronicled in the book and the movie “The Big Short.”
The Scion boss is also known for inadvertently contributing to the meme-stock frenzy by investing in GameStop, taking short positions against Elon Musk’s Tesla and Cathie Wood’s flagship Ark fund last year, and tweeting bleak warnings that rampant speculation and skyrocketing asset prices are inevitably followed by painful market crashes.
Source: Business Insider