- A recession is coming this summer and will last until mid-2024, Evercore chairman Ed Hyman said.
- The market veteran pointed to worrisome signals in the economy that are warning of a downturn.
Signs of trouble brewing in the economy suggest a recession will unfold this summer and last through mid-next year, according to Evercore chairman Ed Hyman.
"The economy now is very strong. It's amazing. But I'm patient, and I think that by the summer, we'll start to see a recession unfold," the market veteran said in an interview with Bloomberg on Tuesday, adding that he didn't foresee a severe recession, like in 2008.
A downturn will be brought on due to the Fed's aggressive monetary tightening policy, Hyman said, especially since other central banks around the world, such as the European Central Bank, are tightening policy at the same time.
"If we're tightening and other central banks aren't tightening, it's not so bad. But if we're tightening and other central banks are tightening, it makes our tightening much more aggressive on the economy," he added.
The full impact of tighter Fed policy is also delayed by about 16 months, Hyman said, citing research from the economist John Keynes. That means it could take another year for the full consequences of the Fed's moves to bubble to the surface, though the economy is already starting to flash warnings that a downturn is imminent.
In particular, Hyman pointed to the contraction in the money supply stemming from recent banking failures, as well as the inversion of the 2-10 Treasury yield curve, which is known as a notorious predictor of a coming recession.
"I've never forecast a recession this far in advance," he said, suggesting that the Fed didn't need to keep rates at the current level. Interest rates are hovering between 5-5.25%, the highest level since 2007.
Numerous experts and commentators have flagged the growing risk of recession over the past year, as central bankers raised interest rates and reduced the size of the Fed's balance sheet to tame inflation.
High rates and the rapid draining of liquidity up the risk the economy enters a downturn, with a 68% chance the US tips into a recession within the next 12 months, according to the New York Fed's Recession Probability Index in April.