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‘The economy is braking hard,’ says billionaire Barry Sternlicht

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The U.S. economy is teetering getting ready to a serious downturn if the Federal Reserve doesn’t pump the brakes on its rate hikes, billionaire CEO Barry Sternlicht said.

The central bank has already raised rates of interest 4 times this 12 months and is widely expected to hike them by 75 basis points next week in an effort to tame inflation. Earlier this week, consumer prices rose 0.1% as an alternative of the 0.1% decline economists surveyed by Dow Jones were expecting.

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Nonetheless, Sternlicht believes the Fed was late to the sport and is now being too aggressive.

“The economy is braking hard,” the chairman and CEO of Starwood Capital Group told CNBC’s “Squawk Box” on Thursday.

“If the Fed keeps this up they’ll have a serious recession and other people will lose their jobs,” he added.

Consumer confidence is terrible and CEO confidence is “miserable,” Sternlicht said. Supply chain issues are being resolved, and inventories at the moment are backing up in warehouses, which is able to lead to large discounting, he said.

“The CPI, the info they’re is old data. All they must do is call Doug McMillon at Walmart, call any of the true estate fellas and ask what is going on to our apartment rents,” he said, mentioning that the speed of rent growth is now slowing.

The continuation of rate hikes may even cause a “major crash” within the housing market, Sternlicht predicted. The once-hot real estate market is swiftly slowing down, with mortgage rates for a 30-year fixed loan over 6% — up from 3.29% at first of the 12 months, in response to Mortgage News Day by day.

While the Fed’s goal is 2%, inflation should run at 3% to 4%, Sternlicht said.

“Inflation that’s driven by wage growth is fabulous. We must always want wages to go up,” he said.

“You’ll be able to pay higher rents, you possibly can buy your equipment, you possibly can go to the restaurant if you will have high wage growth.”

As for when the “serious recession” will hit, Sternlicht believes it’s imminent.

“I feel [in the] fourth quarter. I feel immediately,” he said. “You will see cracks in every single place.”

Correction: Doug McMillon is CEO of Walmart. An earlier version misspelled his name.

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