The CEO of luxury furniture retailer RH insists the US is in a recession
The CEO of a luxury furniture retailer said it was ‘crazy’ to think the US economy was not in recession as household wealth plummeted by a record $6.1 trillion in the second trimester.
“I don’t know, people keep saying, are we going to be in a recession?” We’re in a recession,’ Gary Friedman, managing director of HR, formerly known as Restoration Hardware, said on an investor call Thursday.
“Anyone who thinks we’re not in a recession is crazy. The housing market is in a recession, and it’s only just begun. So it’s probably going to be a tough 12 to 18 months in our industry,” he said.
The US economy has contracted for two straight quarters in the first half of 2022, which is an informal sign of a recession, but President Joe Biden continues to insist the economy is strong.
He and his administration have also sought to deflect claims that the United States is experiencing an economic contraction. It sparked another culture war battle as the president’s cheerleaders – including some media outlets – sought to defend his insistence that all is well with the US economy, despite crippling US inflation. 8.5%.
“I don’t know, people keep saying, are we going to be in a recession?” We’re in a recession,’ HR CEO Gary Friedman said on an investor call Thursday.
The US economy contracted for two consecutive quarters in the first half of 2022, which is an informal sign of a recession
The issue has become highly politicized, with Biden pointing to the robust labor market as a sign of strength, and his critics citing soaring inflation and weak growth as signals that a recession is already underway.
Despite his grim warning, Friedman maintained an optimistic note during Thursday’s earnings call, and the company’s shares rose 4.4% in Friday’s session.
‘Like, we’ve been through storms before. We have been through recessions before. We have been through the Great Recession before,” Friedman said. ‘We know what to do. We know how to play this game.
RH, like other furniture retailers, has been hit hard by inflation, which has sharply reduced discretionary spending as consumers spend more of their household budget on essentials such as food and gasoline. .
Friedman said a recession of some magnitude was on the cards because of the Federal Reserve’s aggressive interest rate hike path.
In its fight against inflation, the Federal Reserve has raised its key rate four times in a row, to 2.5% from near zero in March, and is expected to implement another massive hike later this month.
The central bank is trying to calm inflation without crushing the economy, a path that seems to narrow with every piece of bad economic news.
President Joe Biden continues to insist the economy is strong, citing the robust job market
The Fed issued such a negative signal on Friday in a report showing household wealth plunged by a record amount last month as the bear market wiped out trillions in savings.
Total household wealth in the United States, defined as assets minus debts, fell to $143.8 trillion at the end of June, from $149.9 trillion at the end of March, its second straight quarterly decline.
The quarterly decline of $6.1 trillion was the largest on record, the Fed’s quarterly national balance sheet overview showed.
In the second quarter, it hit its lowest level in a year as a bear market in equities far outpaced further gains in real estate values, a report from the Federal Reserve showed on Friday.
Through June, the collective wealth of Americans had fallen by more than $6.2 trillion, down from a record low of $150 trillion at the end of 2021.
The net decline in wealth in the second quarter was about $30 billion larger than the previous record drop two years earlier as the onset of the COVID-19 pandemic jolted financial markets.
Total household wealth in the United States, defined as assets minus debts, fell by $6.1 trillion in the second quarter, the largest drop on record, mainly due to the decline in the stock market
However, this decline – in the second quarter of 2020 – remains the largest in percentage terms, at 5.2% compared to 4.1% in the most recent report.
The latest fall was led by a $7.7 trillion decline in stock market values as stocks slid into a bear market in the first half of the year.
Markets fell sharply in the first half of the year on fears of soaring inflation and the aggressive response of the Fed by raising interest rates.
Stock market losses exceeded a $1.4 trillion gain in real estate values.
Household debt growth slowed to an annual rate of 7.4% from 8.3% in the first three months of the year, while corporate, federal and state debt levels and local governments have all increased.
Federal government debt increased by 5.6% at an annual rate in the second quarter of 2022, compared to 10.2% at an annual rate in the previous quarter.