In this YouTube commentary, host David Oualaalou assesses the current state of the U.S. economy, challenging official government narratives and highlighting the disconnect between stock‑market performance and underlying economic fundamentals. He notes that despite a rising market in the first half of 2023, key indicators such as consumer spending and employment have shown resilience while inflation remains high, contradicting claims that inflation is merely transitory. Oualaalou points to historical evidence that rapid interest‑rate hikes typically precede recessions—nine of the last ten since 1954—and explains the lag of 12‑18 months before the effects manifest. He critiques Federal Reserve Chairman Jerome Powell’s statements as overly optimistic, warns that unemployment historically only rises once a recession has begun, and warns of potential future hardship for average Americans. The video also places the U.S. outlook in a global context, projecting modest growth for Europe and slightly higher growth for China, while noting a likely 1% contraction for the U.S. Oualaalou discusses income inequality, citing median household income figures and the stark contrast with top‑1% earnings, arguing that these numbers are often obscured in official messaging. He concludes that the economy is a complex machine whose response to policy is uncertain, urging viewers to stay cautious and informed.
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Hello everyone and welcome to Geopolitical Trends. My name is David Oualaalou. So good to be with you as always. Is the US economy in a severe recession or a smooth slowdown? In this video, I'm going to provide you my assessment about what is the current state of the US economy really. Is this what the government is reporting Or is it lying to the American citizens? So let's dive in into this topic. Here's the thing, the first half of 2023 was— and if I may use the term or an analogy of like a tornado, economically speaking, with the unexpected market trends and economic indicators sort of defying expectations. You know, that's the reality of it. At the end of 2022, most forecasts back then predicted a recession and a decline in the stock market as the Federal Reserve at that time continues to raise interest rate, and of course companies facing difficulties due to credit pressures. Yet the reality was very different. As a matter of fact, interest rates were just raised about a week ago, and, uh, Jerome Powell, the Fed chairman, intended to keep them going up. So, so in a report, in a reason— and I will provide you the link to all this, guys, so you'll have a source where the information is coming from— in a recent report which was published by Forbes, which deals with the economic data and so forth. Writer Dan Irvin said, and I quote, while the U.S. stock market was rising in the first half of the year, economic indicators deteriorated at an accelerated pace, end of quote. So in the face of this sort of a fastest price hike cycle in history, consumer spending especially and employment remained somewhat remarkably resilient. So it's kind of mind-boggling. The reality on the ground is different versus what the indicators on stock markets and the data coming out of the U.S. government. Of course, our beloved government will not disclose the truth. Like when the Secretary of Treasury said, oh, the inflation is transitory, which is not. It was flat out a lie. That's how government, our government behaves, per se. So the market and the economy operate separately, of course, and often diverge widely. This is like a basic understanding in economics. So in extreme cases, the stock market is eventually sort of, uh, what's the word I'm looking for, forced to respond to economic realities. But you gotta let the markets decide on that. So making short-term market performance a poor, poor measure of the health of the economy or stock markets in the future. That's common sense. So this is why when the government states, oh, the stock market is doing well, that means the economy is doing well. No, it is not. It will be wise— and this is just, uh, as an analyst, I like to think outside the box. So if I warn investors in this area, I will warn or tell the investors to be wise and be cautious Because here's the thing, protracted bear markets are a process full of meltdowns followed by strong rallies that could take years, not just months, to reach their end. You know, this is where the reality is. And I'm gonna give you example, guys. I looked at some historical data, economically speaking, to just provide an example for you to put this in perspective. So, here's my example. During the technological boom, or crash rather, during the technological crash between 2000 and 2002, okay, the NASDAQ saw at about 8 chains run at least 20% and two chains at 52% and 56% respectively. All this means in a simple language that focusing on short period of stock market's performance does not tell us much about the direction that the economy or stock market is heading in the second half of the year. This is my point about this video. So far the numbers saying one story, but that's not the entire story. So this is where you start to think in terms of the stagnation and the indicators for the markets. What do you look for? Well, historically, interest rates hikes are precursor to a recession, with 9 of the last 10 recessions since 1954. That's the— what I found in my research. Since 1954, immediately preceding the arrival of the recession. That's, that's the real— that's the historical trends. Uh, so with the record speed of the current interest rate hike cycle, by the way, we just increased it last week, And the 12 to 18 months delay, so that's how long it takes for a rate increase to clear up the economy. So it's not going to happen next week or next month. So the data on stock market is not going to show that. It takes between 12 to 18 months. This is according to historical economic trends. So, so it is not statistically surprising that we have not entered the recession yet, but the reality suggests we will. So, so Fed Chairman Jerome Powell has repeatedly stated on the record that the Fed believes it needs to slow consumption to achieve the 2% inflation target. Yeah, good luck with that. It's wishful thinking and it's a lie. He's giving false hope to the people. He can't be lying to people here. It's because markets sometimes, so especially the stocks, it has to do with the sort of the optimism coming out of the government. Of course the government has that possibility of printing more money, which our— that will be our doom to crash the economy moving forward. So wake up, Americans, if you are watching this. So to me, that's wishful thinking what he's saying, because here's the thing: history shows us once again that, for example, unemployment does not begin to rise significantly until recession begins. And, and, and, uh, looking at the research that I looked at, and I will provide you a link, guys, In the last 10 of the 12 recessions since 1948, yeah, since 1948, unemployment did not begin to rise until the recession actually began. So this is what the government is avoid saying. That's what the government is, is not saying. So the average Joe, average Jane does not understand this reality. So to avoid the renewed explosion of inflation similar to what we had back in the '60s and the '70s, the Fed announced that it intends to keep interest rates high for a long time. Yeah, that is what the government sort of, it's not explaining to average people, average citizens to understand. Once again, historically, the stock market peaks shortly before a recession and then declines before the end of the recession. So if markets follow historical standards, we may expect a decline in the near future. That is the reality of it. So looking at a major economic around— major economies around the world, because I have to put this within a global context, the big picture as I always say, looking at a major economies around the world, the US may decline. And again, this is based on the research that I found and my basic understanding of how economy works. So major economies around the world, the US economy will decline by about 1%, give or take. Europe should remain flat to slightly negative given the shortage in energy, and China could grow to about 2 to 3%, uh, according to the estimates from— and by the way, the source of this is the Capital Strategy Research, CSR. So, and Capital— the CSR is a macroeconomic research entities. So, so the political calculations for the government's initial estimates will be like, okay, well, how we're gonna approach this? What should we tell the citizens to minimize the impact of the economic downturn? Well, one big way to look at this is you look at the median household income. That will give you an idea. So the political calculation initial is estimates of a median income of— in March, this was in March, done, uh, 2023 of this year, was about $81,340. So adjusted for inflation, the level of median household income in March 2023 represented a 182% increase over February estimate, which earned income back then outpacing consumer price inflation during the month. And by the way, guys, this is without including the top 1%. This is what the government sometimes plays with numbers, because average Joe, average Jane, this will be too confusing. They need to understand it in a basic language and how we translate to their daily life. To their pockets whether they can afford to buy dinner or not. That is the truth. So what is the top 1% household income, you may ask? Well, to be in the top 1%, this is— I'm gonna give you stats from 2022, so you can only imagine in 2023 would have to increase. In 2022, to be in the top 1%, a household needs to earn about $570,000. And in 2021, that 1% household income was about $504,000. So you can only— what would be— they didn't release the, the stats. I didn't find it yet for 2023. So if I am to guess, adjust for inflation, you will be looking at about $625,000. Every Joe, every Jane here in the US doesn't make that kind of money. So that's the reality of it. So here's my conclusion for you, because I like to keep this short, concise, and to the point. One thing is certain: the US economy is a large, complicated machine that can sometimes defy expectations. I'm not denying it. And the lovers of the Federal Reserve uses to fine-tune that machinery are imperfect. So even with the Fed's sort of clearly defined plans, it's anyone's guess exactly how the economy will respond to its maneuvers in the near term, especially with increasing of interest rate. This is how I see it. So to average Joe and average Jane, they are looking at hardships moving forward. How they gonna manage that financially? I wish I have an answer to that. Make sure guys to leave me some comments regarding this video, and if you like the content, please hit that like button and remember to subscribe. I will truly appreciate it. As always, remember, geopolitics impacts your daily life in more ways than one. Till next time guys, bye-bye.
