Chamath @ 00:30:20Wrong
economymarkets
The US is already effectively in recession as of mid-2024, and this will become clearly evident in official data and revisions by Q3–Q4 2024, prompting Federal Reserve Chair Jerome Powell to begin cutting interest rates during that period; the open question is only the magnitude of rate cuts (whether roughly 75–100 basis points or a slower 25-basis-point pace).
I don't think the demand is there. I think we're in a recession. It probably becomes more obvious in Q3 and Q4. And so Powell's going to have to cut. The question is, will he overreact to the pressure and cut 75 to 100 versus 25 and take it slow?View on YouTube
Explanation
Key parts of Chamath’s prediction did not materialize, even though one sub-component (rate cuts) did:
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Recession call and data becoming “more obvious” in Q3–Q4 2024
- Official U.S. real GDP growth was positive in every quarter of 2024. BEA data show real GDP increasing 1.6% in Q1 2024 (advance), 2.8% in Q2 (advance, later revised around 3.0%), about 3.0–3.1% in Q3, and 2.4% in Q4; full‑year 2024 growth was 2.8%. (bea.gov)
- The National Bureau of Economic Research (NBER), the standard arbiter of U.S. recessions, has not dated any new recession after the April 2020 trough; its business‑cycle chronology and derivative indicators show expansion (recession indicator = 0) through at least Q3 2025. (nber.org)
- Because GDP and other broad indicators remained solidly positive and no NBER recession was declared, it did not become “more obvious” in Q3–Q4 2024, via official data or revisions, that the U.S. had already been in recession as of mid‑2024. This central claim of the prediction is therefore contradicted by realized data and the main official arbiter.
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Powell “will have to cut” rates in Q3–Q4 2024, question being the size
- The Federal Reserve did cut rates in that window: at its September 18, 2024 meeting, the FOMC lowered the federal funds rate by 50 basis points (from 5.25–5.50% to 4.75–5.00%), the first cut since the early COVID period. (cnbc.com)
- Chamath framed the open question as whether Powell would “overreact” and cut 75–100 bps vs 25 bps. In reality, the Fed chose an intermediate path—a 50 bps move with projections implying roughly 100 bps of total easing by the end of 2024—so the actual outcome did not match either extreme he posed. (cnbc.com)
Overall, the core thesis—that the U.S. was already in recession and that this would be clearly borne out by official data and revisions in Q3–Q4 2024—was not borne out. Although he was directionally right that the Fed would start cutting rates in that period, the main, testable part of the prediction (the existence and recognition of a mid‑2024 recession) was wrong. Given that sufficient time and data have now accumulated, this prediction is best classified as wrong.