Wall Street veteran: The challenges facing the U.S. economy may be underestimated, and the Federal Reserve may begin a "panic rate cut cycle."

Ed Dowd, a senior analyst on Wall Street and founding partner of global macro alternative investment firm Phinance Technologies, recently stated that Trump "inherited a mess" after being elected president, and the U.S. economy is facing severe challenges that are underestimated by the outside world. He warned that the Federal Reserve's upcoming interest rate cuts may evolve into a "panic rate cut cycle," similar to the situation during the 2007 financial crisis, but rate cuts will struggle to prevent asset value shrinkage.

Dowd believes that the annual employment revision data released by the U.S. Bureau of Labor Statistics (BLS) last week exposed serious issues with economic data during the Biden administration, describing the situation Trump now faces as "a disaster."

Dowd also noted that the U.S. real estate market has begun to weaken, inflation expectations are declining, and the Federal Reserve's rate cut measures may struggle to reverse this trend. Dowd predicts that the world will fall into "a very deep recession," advising investors to consider safe-haven assets such as gold and land.

Employment Data Revision Exposes Economic "Statistical Fraud"

Last Tuesday, the BLS announced that, for the 12 months ending in March of this year, U.S. non-farm employment numbers were significantly revised down by 910,000, equivalent to an average monthly increase of nearly 76,000 less than expected. This is the largest downward revision since 2000. Dowd harshly criticized such a significant downward revision of employment data, claiming that this deviation has fraudulent characteristics. He stated:

"This could be statistical fraud, bureaucratic incompetence, or a combination of both. This deviation is an outrageous 7 standard deviations. 3.4 standard deviations is equivalent to the probability of a person being struck by lightning at least once in their lifetime, which is very small. A deviation of 7 standard deviations strongly suggests fraudulent behavior."

Dowd pointed out that the large-scale illegal immigration during the Biden administration (estimated by him to be about 20 million) artificially supported U.S. economic data, and now, as Trump's new administration strengthens border control and expels illegal immigrants, these factors will reverse, further dragging down economic performance.

U.S. Faces Danger of "Real Estate Recession," Inflation Expected to Fall Below 2%

The real estate market is becoming a major concern for the U.S. economy. Dowd predicts that the real estate market will continue to decline, which will have a profound impact on the overall economy, as real estate accounts for 36% of the economy. Dowd explained:

"The real estate market is collapsing because people cannot afford housing costs. Previously, the real estate market was supported by rent paid by illegal immigrants. With Trump closing the border and expelling illegal immigrants, this trend is reversing. Our real estate report released a month ago shows that all indicators are declining, and we will face a real estate recession."

Due to the weakening real estate market, Dowd predicts that inflation will significantly decrease, stating, "We expect to see inflation data below 2%," which aligns with the Federal Reserve's inflation target but reflects economic weakness rather than a healthy cooling.

Federal Reserve May Fall into "Panic Rate Cut Cycle," Asset Value Shrinkage Inevitable

Regarding the market's general expectation of a Federal Reserve interest rate cut, Dowd raised concerning historical analogies. He stated that the current situation is similar to the early stages of the 2007 financial crisis, when the Federal Reserve began to cut rates, but the stock market did not bottom out until 2009. Dowd warned:

"This is what I consider the beginning of a 'panic rate-cutting cycle.' We will see the Federal Reserve cutting rates all the way down during this asset deflation process. Cutting rates in a slowing growth environment will not lead to asset (value) re-inflation. They are already behind the curve, and as we fall into deflation, they will continue to cut rates."

Dowd believes that the Federal Reserve's rate cuts will not prevent the impending decline in asset prices and economic recession. He stated that the current economic difficulties are not limited to the United States, as Europe and other regions are also facing significant issues, and the global economy will soon fall into a "very deep recession."

Investment Advice: Gold and Land Outperform Cryptocurrency

In the face of the upcoming economic challenges, Dowd advises investors to focus on traditional safe-haven assets. He remains optimistic about gold and revealed that his clients are increasing their holdings in gold and land, rather than cryptocurrency.

This advice is based on his expectations of asset deflation and economic recession. In an environment of declining interest rates and falling asset prices, traditional safe-haven assets may provide a more reliable value preservation function.

Throughout his career on Wall Street, Dowd has successfully predicted several major market turning points, including the collapses of Enron and Lucent Technologies, as well as the recent peak and decline in interest rates and the real estate market. His latest warning has raised further concerns among market participants regarding the outlook for the U.S. economy