Economy Worse Than You Think, Says The Cow Guy: 'Government Spending Hand Over Fist' Has Prevented Recession

While the U.S. economy has held up seemingly well despite high interest rates, some market experts don't believe everything is as good as it seems. Scott Shellady, aka ‘The Cow Guy,' joined Benzinga's PreMarket Prep Friday morning, and argued that government-reported labor data has not reflected a slowdown in the U.S. economy.

Shellady spoke prior to Fed Chair Jerome Powell's Jackson Hole speech, in which Powell acknowledged an “unmistakable” cool down in labor markets. Shellady asserted that government spending has been the only thing that has kept the U.S. out of recession territory. 

Read Also: Traders Raise Bets On Aggressive Rate Cuts As US Economy Sees 818,000 Jobs Revised Away: 7 ETFs React To Employment Data

"The reason why we haven't been in an official recession… we've had government spending hand over fist," Shellady said. "We've basically spent our way out of not having a recession. If you look at those job numbers month over month, the government spending has kept us out of a recession and that's it."

Shellady also pointed out that the jobs numbers have also recently been revised, to show that the U.S. actually added less jobs than initially reported.

But, Shellady does not think the Fed will be able to easily fix the cooldown in the labor market by cutting rates. He told the PMP hosts that the Fed is in a sticky situation, if it cuts rates then inflation will likely come back up, but if it doesn't cut rates than the labor market will continue to worsen.

"So they're in damned if you do, damned if you don't," Shellady said. "If they cut rates they're going to have an inflation problem, if they don't, they're going to have an American story problem."

Powell appears to be willing to take his chances with inflation perking back up, and is ready to cut rates in September. CME's FedWatch Tool currently shows an 100% chance for a cut at the Fed's Sept. 18 meeting, with about a 70% chance for a 25 bps cut and a 30% chance for a 50 bps cut.

Read Next:

• Jerome Powell: ‘Time Has Come’ For Interest Rate Cuts, Cooling In Labor Market ‘Unmistakable’

Image: ScottShellady/RFD-TV StuBaileyPhoto/Pixabay