Reagan-era professor warns of recession, accompanying other warnings from experts

Reagan-era professor Steve Hanke warned on a recent interview that U.S. recession risk is far from null, but rather has a very real chance, accompanying the warnings of other professors, economists, and analysts.

U.S. President Donald Trump (left) and Johns Hopkins University professor Steve Hanke (right).

Professor Hanke, in a recent interview, warned that a contraction of the U.S. money supply is a "harbinger of things to come" referring to a possible recession. He added, "I think things will continue to show weakness and slow down in the United States and probably end up tipping into a recession later this year."

"Monetary policy is not about interest rates, it's about changes in the money supply," stated Hanke. "So they're just looking at the wrong gauge."

His forecast for a recession remains 80-90% in the "near future." This number is far larger than even Polymarket's average betting odds of 13% in 2025.

Hanke is currently serving as an applied economics professor at Johns Hopkins University, but previously was a member of President Ronald Reagan's Council of Economic Advisors. Previously an advisor for fiscal conservative administrations, Hanke is not calling out those same politicians for facilitating a detrimental economic outcome as a result of their very policies.

Hanke has been warning of a recession ever since the inflationary surge of 2022, believing that the dwindling money supply from the Federal Reserve's loose monetary policies post-pandemic in an attempt to stabilize the economy.

Though, as of now Hanke's previous predictions have been largely incorrect, including his proposition that "We will enter a recession either late this year or early next year."

But his recession fears are not alone. Mark Zandi, the Chief Economist at Moody's Analytics, warned last week that the United States was on the "precipice of recession," citing poor economic data such as July's jobs report, June's revised jobs report, and rising inflation from recent consumer price indexes (CPIs).

While Federal Reserve data has shown that the money supply has risen slightly over time, Hanke has argued that the growth of the money supply is still below his so-called "Golden Rate" of 6%.

What's unique is that not many other experts have cited monetary supply concerns as a reason for recession. But, his insight provides much-needed recognition of a neglected problem that the shifting Federal Reserve administration needs to face as it shifts its focus toward cutting interest rates in the latter half of 2025.