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What recession? The consensus view that recession was just about a slam dunk appears more and more off base. Sure, there’ll finally be one, however odds {that a} downturn is useless forward are receding. There are a bunch of the reason why the economic system is hanging robust. Listed here are my high three…
First, extra financial savings. Shoppers couldn’t spend as they sometimes do throughout the pandemic as they have been caught at dwelling. On the peak, extra financial savings amounted to 10% of GDP. Shoppers have since been utilizing the financial savings to complement their buying energy and calibrate their spending.
Second, labor hoarding. Companies desperately need to keep away from layoffs. Even earlier than the pandemic that they had huge hassle discovering and retaining expertise. Additionally they know that the labor shortages might be a perennial drawback because the boomers are retiring and immigration is impaired.
Third, low leverage. Households and companies have borrowed prudently, and their debt service burdens are traditionally mild. They’ve additionally locked within the beforehand low charges. Some low revenue households and PE-acquired companies have overdone it. However they’re the exception.
I stay agnostic on these questions, however I’d notice that “conditional on inflation coming down from 5 %” could be a helpful qualifier for a few of this dialogue…
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