ARK Invest CEO Cathie Wood said Tuesday that the U.S. is already in an economic downturn, and she admitted that she underestimated the endurance of inflation.
"We think we are in a recession," Wood said Tuesday on CNBC's influential morning news show, "Squawk Box." "We think a big problem out there is inventories ... the increase of which I’ve never seen this large in my career. I've been around for 45 years."
Wood said inflation, which is at 8.6% annually, is worse than she had expected, owing to supply-chain disruptions and the Russia-Ukraine war.
"We were wrong on one thing and that was inflation being as sustained as it has been," Wood said. "Supply chain ... can't believe it's taking more than two years, and Russia's invasion of Ukraine, of course, we couldn't have seen that. Inflation has been a bigger problem, but I think it has set us up for deflation."
Inflation measured by the consumer price index (CPI) rose 8.6% in May from a year ago, the fastest increase since December 1981, CNBC noted.
Wood said consumers are hurting from the rapid price increases of food and gas, referring to the University of Michigan's Survey of Consumers, which showed a reading of 50 in June, the lowest level ever.
Wood's ARK funds are composed of disruptive technology stocks such as Tesla, Zoom, Roku, and Teladoc, and have fared adversely this year amid rising interest rates. Her flagship ARKK active fund is down 52% year-to-date, falling 66% from its 52-week high. Her other funds are ARKW, ARKG, and ARKF.
Despite her funds sinking this year, Wood says they continue to attract inflows, and investors have a five-year investment time horizon.
“We are dedicated completely to disruptive innovation," she said. "Innovation solves problems.”
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