Kevin O’Leary warns of economic chaos, with the Fed’s aggressive rate hikes set to crush small businesses – DIGIWIZ CENTRAL

Kevin O’Leary warns of economic chaos, with the Fed’s aggressive rate hikes set to crush small businesses

“Shark Tank” investor Kevin O’Leary.

(Photo by Alex Wong/Getty Images)

Kevin O’Leary once again warned that the Federal Reserve’s sharp interest-rate hikes could cause economic chaos.
The central bank has lifted borrowing costs from near-zero to 5.5% over the past 18 months.
The “Shark Tank” investor is worried about the impact that tightening campaign could have on small businesses.

Americans should start to brace for a severe downturn as the economy feels the full force of the Federal Reserve’s aggressive tightening campaign, according to Kevin O’Leary.

Last week, the “Shark Tank” investor warned once again that the central bank’s aggressive interest-rate hikes are likely to crush smaller businesses, who have seen borrowing costs soar over the past 18 months.

“We have a crisis emerging,” O’Leary told Fox Business. “I’m talking about companies with five to 500 employees, which represent over 60% of our economy.”

“If you’re in the S&P 500, you have no trouble financing your business. You can’t say that about small business anymore,” he added. “The cost of capital has gone through the roof.”

Between March 2022 and July 2023, the Fed raised interest rates from near-zero to around 5.5% in a bid to tame soaring prices.

Its hikes have led to inflation cooling away from four-decade highs to just 3.2% in July and the US has thus far managed to avoid a recession, defying most forecasters’ predictions of a slump.

There have been some signs of economic disruption, though – including March’s banking chaos, which ultimately led to the collapse of several regional lenders.

O’Leary, who previously ran to be leader of Canada’s Conservative Party, also appeared to criticize the Biden administration, whose economic reforms he said had made mega-cap trillion-dollar companies even richer rather than supporting small businesses.

“We’ve got the CHIPS and Science Act. Where’s that money going? Behemoth giant companies in the S&P 500,” he told Fox. “The Inflation Reduction Act, another trillion not even printed yet – all going to big guys.” 

“But 60% of America is small business. That’s where 60% of the jobs come from. We’ve given nothing to them,” O’Leary added. “And so they’re struggling because the Fed is raising rates up to 5.5% in a matter of months.”

Read the original article on Business Insider
Please follow and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *

RSS
Follow by Email
LinkedIn
Share