22 August 2023
Despite warnings since April 2022, the U.S. economy looks robust. However, concerns persist:
1. **Federal Reserve’s Interest Rate Hikes:** There’s been a steep increase from near zero to 5.5% in 16 months. Although immediate repercussions haven’t been evident, such rapid hikes typically have delayed negative effects.
2. **Inflation and Spending:** Even if inflation seems controlled, cumulative price hikes since the pandemic’s onset could eventually curtail consumer spending.
3. **Industrial Decline:** Industrial production is trending downward, signaling potential broader economic issues.
4. **Bank Lending Standards:** Over half of banks are tightening lending standards for businesses, which can hamper growth and employment.
5. **Inverted Treasury Yield Curve:** This typically precedes a recession. The curve has been inverted since last year, hinting at investor concerns.
6. **Market Overconfidence:** Current market strength might be deceptive, overshadowing looming economic challenges.