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Ark Invest CEO Cathie Wood said Tuesday that the U.S. is already in an economic downturn, and she admitted that she underestimated the severity and lasting power of inflation.

“We think we are in a recession,” Wood said on CNBC’s “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.”

The billionaire said inflation has turned out to be more severe than she had expected due to supply chain disruptions and geopolitical risks.

“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 it has set us up for deflation.”

Inflation measured by the consumer price index soared 8.6% in May from a year ago, the fastest increase since December 1981.

Wood said consumers are pressured by the rapid price increases, reflected in sentiment data that’s fallen to record lows. She pointed to the University of Michigan’s Surveys of Consumers, which showed a reading of 50 in June, the lowest level ever.

The prominent investor has had a disastrous 2022 as her disruptive technology darlings have been among the biggest losers this year following rising interest rates. Her flagship active fund Ark Innovation ETF (ARKK) plummeted a whooping 52% year to date, down 66% from its 52-week high.

Nonetheless, Wood said her clients are still with her and new money is coming in as investors seek diversification in a down market. ARKK has had more than $180 million in inflows in June, according to FactSet.

“I think the inflows are happening because our clients have been diversifying away from broad-based bench marks like the Nasdaq 100,” Wood said. “We are dedicated completely to disruptive innovation. Innovation solves problems.”