15-30% Market Correction + Recession 'Baked In The Cake'? | Steve Hanke

Economic theory suggests the rest of 2025 will get even rougher

Over recent years, today's expert has consistently been one of the best predictors of where the inflation rate was headed.

So, where does he see it heading from here?

How about interest rates?

And, why is he calling the Federal Reserve an "engine of income inequality?

To find out, we have the good fortune to sit down and get a full update today from Steve Hanke, professor of applied economics at the Johns Hopkins University in Baltimore, Maryland.

Steve explains why the formulas he relies on, plus the “regime uncertainty” of the new Administration’s disruptive policies, indicate an economic slowdown and further market correction later this year.

To hear his math why, click here or on the video below:

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Adam’s Notes: Steve Hanke (recorded 3.27.25)

EXECUTIVE SUMMARY:

• Economic Slowdown and Recession Risks - Steve Hanke points to a contraction in the U.S. money supply (M2) since 2022, a rare event historically linked to recessions, including the Great Depression. He predicts a slowdown, potentially a recession, later this year, exacerbated by policy unpredictability.

• Regime Uncertainty - Hanke defines "regime uncertainty" as widespread unpredictability in policy and regulation, drawing parallels to the New Deal era. He attributes this to the Trump administration’s erratic tariffs and interventions, which deter investment and prolong economic weakness.

• Inflation and Interest Rates - Steve forecasts inflation hitting the Fed’s 2% target in 2024, possibly dipping below, due to the lagged effects of monetary contraction. Hanke faults the Fed for ignoring the quantity theory of money, which he considers essential for accurate economic forecasting.

• Market Risks - Hanke views the stock market as overvalued, with profit growth forecasts (15%) overly optimistic compared to his 5% estimate. He anticipates a 15-30% correction and advises holding