Bridgewater's Ray Dalio says the US is showing the hallmark signs of a recession.
He added that the economic picture could worsen for the next two years.
Dalio pointed to drawdowns in cash balances, contracting housing and auto sectors, and rising delinquency rates.
Billionaire investor Ray Dalio sees the classic early warning signs of a recession in the US and expects the economic picture to get worse over the next two years.
The Bridgewater Associates founder told MarketWatch on Wednesday that given rising interest rates meant to tame record-high inflation — coupled with other factors like the Russia's invasion of Ukraine rattling energy markets — the US economy has more room for further pain.
"I think it's going to get worse into '23 and '24, which has implications for elections," Dalio said.
He pointed to key red flags, namely drawdowns in cash balances that had been built up earlier, the contraction of both the housing and automotive sectors, as well as a rise in credit delinquency rates.
"We are right now very close to a zero-percent growth," Dalio said.
The central bank, lead by Chairman Jerome Powell, has remained consistent in its messaging that the Fed prioritizes reining in inflation back down toward its 2% target over economic growth.
On Wednesday, the Federal Reserve announced another 75-basis-point increase in benchmark rates, while also signaling that additional hikes would follow in future meetings.
Speaking before the Fed's policy announcement, Dalio said the Fed has a tradeoff between strengthening the economy and controlling inflation.
"They will tighten monetary policy and take away credit until the economic pain is greater than the inflation pain," he said.
Read the original article on Business Insider