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'We're Going To Have One Whopper Of A Recession In 2023': State of U.S. Economy Remains Uncertain

According to Steve Hanke, professor of applied economics at Johns Hopkins University, the U.S. is likely to experience a recession next year.

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Chatter about a pending recession has been the talk of the summer, and according to some experts, it's near — and isn't necessarily a product of rising interest rates.

According to Steve Hanke, a professor of applied economics at Johns Hopkins University, the U.S. is headed toward a recession in 2023 because "we've had five months of zero M2 growth, money supply growth, and the Fed isn't even looking at it," Hanke said, per CNBC.

Hanke also added that the period of sustained inflation is due to an "unprecedented growth" of money supply that began with Covid in 2020 and has continued, meaning inflation may remain high into 2023 and "probably 2024."

Related: You Must Understand This Crucial Retirement Benefit If You Want Your Money to Withstand Inflation — Whether You're 25 or 75

As far as the Fed's role is concerned, Hanke remains skeptical about the actions taken thus far.

"The problem we have is that the [Fed chair Jerome Powell] does not understand, even at this point, what the causes of inflation are and were," Hanke told CNBC. "He has failed to tell us that inflation is always caused by excess growth in the money supply, turning the printing presses on."

Hanke isn't the only one putting pressure on the Fed. Stephen Roach, a Yale University senior fellow and former Federal Reserve economist, told CNBC that Powell may have no choice but to aggressively hike interest rates by taking a Paul Volcker approach.

"Go back to the type of pain Paul Volcker had to impose on the U.S. economy to wring out inflation. He had to take the unemployment rate above 10%," Roach told the outlet. "The only way we're not going to get there is if the Fed under Jerome Powell sticks to his word, stays focused on discipline and gets that real Federal funds rate into the restrictive zone. And the restrictive zone is a long ways away from where we are right now."

Although Roach said the U.S. needs a "miracle" at this point to avoid a recession, the fact remains that unemployment levels are still low, 3.5% as of July. However, that could change when the Bureau of Labor Statistics releases its August report on Friday.

Related: How Millionaires Prepare for a Recession, According to a Former Wall Street Trader

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