Dallas investor Kyle Bass said the U.S. may need to undergo a “brief recession” as it rethinks its global trade ties and attempts to rein in the federal budget deficit.
”We have to make some difficult choices,” he said in an interview on Bloomberg Television. “Both of those things might be slightly recessionary, and if that’s true, we might have to go to a brief recession in order to rebuild our foundation.”
President Donald Trump’s moves to increase trade levies is likely to lead to a slight inflationary uptick on a couple of goods that ended up in the tariff melee, said Bass, founder of Hayman Capital Management. But short-term pain will help the economy emerge on a stronger footing, he said.
“This is a necessary resetting so that we can grow again in the future, and grow more profitably,” he said.
Bass made his name predicting the housing subprime mortgage crisis running up to the 2008 recession. He made a half billion in the process, but his predictions since, including several recession forecasts, have produced mixed results.
- Julie Fine and Katie Greifeld for Bloomberg News