Economist Warns of Impending Major Crash Claims Federal Reserves Intervention Is Far Too Delayed to Salvage Economy
Amidst the prevailing uncertainty about the future course of the United States economy, a specialist has sounded the alarm that the Federal Reserve’s actions may prove inadequate.
Specifically, the macroeconomist Henrik Zeberg, in a social media post dated July 3, cautioned that the Federal Reserve’s reaction to the ‘decelerating economy’ is markedly belated, potentially precipitating the most severe economic downturn since 1929.
Zeberg voiced his apprehensions regarding the Federal Reserve’s emphasis on inflation, which he contends is a trailing indicator within the economic cycle.
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The expert foresees that the Federal Reserve’s eventual monetary stimulus will lead to a transient market surge—a vigorous yet fleeting rally—prior to a profound recession commencing in the last quarter of 2024.
“The Federal Reserve will intervene – but their response is already significantly overdue. The so-called experts are fixated on ‘inflation,’ a trailing indicator in the Economic Cycle. Brace for the most catastrophic crash since 1929,” he stated.
**Non-manufacturing New Orders Indices as an Indicator:**
Importantly, Zeberg’s predictions are grounded on the non-manufacturing new orders indices of the United States, which historically precede significant market slumps, drawing parallels between past financial crises and the current scenario.
**Chart of US Non-Manufacturing New Orders Indices. Source: TradingView/Henrik Zeberg**
The analyst’s data pinpoints intervals that led up to notable crashes, succeeded by steep downturns. These pre-crash intervals are marked by declining new order indices, signifying a contraction in economic activity.
Currently, the data exhibits a comparable pattern indicative of an impending crash. The indices are on a downward trajectory, signaling a reduction in new orders across manufacturing and non-manufacturing sectors, corroborating Zeberg’s forecast of an ongoing economic slowdown.
Notably, the Relative Strength Index (RSI) during antecedent pre-crash intervals fell beneath the 50 mark, denoting diminishing momentum. At present, the RSI is once again nearing this pivotal threshold, implying a loss of market momentum.
**Market’s Blow-Off Top:**
Zeberg’s anticipation of a blow-off top preceding a major crash depicts a sharp yet ephemeral spike following the Federal Reserve’s intervention. This pattern mirrors the events leading up to previous significant downturns, where short-term financial injections spurred brief market upswings before the ensuing collapses.
It is noteworthy that Zeberg maintains the stance that the US economy is on the brink of a recession in the latter half of 2024. As reported by Finbold, the economist has cautioned that a temporary market rally might occur, influencing both the stock and cryptocurrency sectors, before the recession sets in.
**Disclaimer:**
The information presented herein should not be construed as investment advice. Investment activities are inherently speculative, and there is always the potential risk of loss of capital.
