According to Ken Griffin of Citadel, the economy is currently performing well.

• Recent data suggests that a soft landing may occur this year, as the labor market remains strong, GDP growth is healthy, and inflation is moderating at a better pace than anticipated, according to Citadel CEO Ken Griffin, who made the statement on Tuesday.
• According to Griffin, who spoke at the MFA Network event in Miami on Tuesday, the Federal Reserve may begin cutting rates this summer, resulting in a slight increase in unemployment. However, the overall economy is currently performing well, as stated by Griffin.

According to Citadel CEO Ken Griffin, the market has overcome the "economic anxiety" it experienced in the fourth quarter of 2023.

The hedge fund manager stated on Tuesday that a soft landing could occur this year, given recent data showing a robust labor market, steady GDP growth, and inflation decreasing at a better rate than anticipated. Griffin added that inflation may drop to the low 2% range by the end of 2024.

According to Griffin, who spoke at the MFA Network event in Miami on Tuesday, the Federal Reserve may begin cutting rates this summer, resulting in a slight increase in unemployment. However, the overall economy is currently performing well, as Griffin stated, "This is a real change in mindset from where we were September, October last year."

The central bank commenced its initial monetary policy of the year on Tuesday, with expectations of keeping rates unchanged. However, the market anticipates several rate cuts in 2024.

Griffin pointed out that while the current level of federal spending has resulted in an economy that "feels really good right now," it could have negative consequences in the future. He stated, "This government spending has got to get in check. It’s creating a bit of euphoria right now, but it will come with a hangover."

The combination of reducing rates and high levels of government spending can lead to inflation, but Griffin believes that the energy and food price shocks that occurred two years ago are now reversing, as well as a slight decrease in hiring. He thinks this has helped create a more favorable environment for the Fed to combat inflation.

Taiwan concerns

Griffin expressed worry about the economic dangers of the conflict between the U.S. and China, particularly concerning Taiwan. The island's semiconductors are vital to numerous American corporations, he stated.

According to Griffin, a rupture around Taiwan would have devastating consequences for both the Chinese and American economies, potentially leading to a Great Depression-like crisis.

If the U.S. lost access to Taiwanese semiconductors, its GDP could suffer a hit of 8% to 10%, emphasizing the importance of maintaining peace between Taiwan and China for economic security, as stated by Griffin.

As the S&P 500 and Dow Jones Industrial Average hover near record highs, Griffin's remarks come at a time when the broad market index has already gained 3%, building on its 24% gain from 2023. The Dow has also increased nearly 2%.