"Never in history have the major economies of the world been in an economic bubble that includes virtually everything. And yet, incredibly, this situation has existed for over a decade. Technically, we’ve been in a depression since 2007 and yet the bubble that should have burst back then simply keeps growing."
Make no mistake - the Fed will cut rates. It has to; and that's not good. If it doesn't the banks are all toast because the massive, "unrealized" loses on their treasury bonds will become "realized" when enough deposits flee to money market funds paying 5%. The cut will make inflation go hyperbolic though. If you think prices are unsustainably high now, just wait! The Fed is between the preverbal rock of banking industry survival and the hard place of grocery prices and the destruction of American living standards.
Incomes and wages haven't kept up with the increase in prices by a long shot causing huge gaps in family household budgets which is the definition of the term, "stagflation" which is characterized by rapidly increasing costs and stagnating incomes. There are already plenty of signs that cuts are being made in discretionary spending even at discount stores:
"Dollar General CEO Todd Vasos acknowledged consumers are being pressured in today's environment of elevated inflation and high interest rates:
DG lowered its full-year outlook for sales and profit. The company slashed its guidance ranges for EPS to $5.50 to $6.20 from $6.80 to $7.55 and for same-store sales growth to 1% to 1.6% from 2% to 2.7%. Bloomberg consensus was around 2.47%."
Meanwhile, the talking heads just keep the music playing and we're all good as long as there's still cold beer to drink and sports-ball to watch on TV.
"More than a few people, meanwhile, are beginning to ask who is running the country, since “Joe Biden” is mostly off-duty, beaching it, not attending cabinet meetings, and probably not being consulted on any number of matters being carried out in his name. Are you comforted to know that the US government is on auto-pilot, a colossal, menacing machine run by ghosts?"
Here's what the data tells us: The US government was able to forestall a severe economic downturn by juicing the economy with government spending and hiring. Those stimulus measures bought us some time but now, the numbers for foot traffic, credit card defaults, commercial loan delinquencies, auto loan delinquencies have been rolling over since March.
As we head into final stretch of an already uncertain election, business owners are also facing and economic downturn which seem to be closer to the beginning than the end. Nothing has been resolved regarding the most critical issues facing our economy such as unlimited printing of inflationary dollars and the catastrophic socio-economic effects of unrestrained migration.
Lending has been affected also, I have to scrutinize my approvals much more than before; the "pie" of qualified borrowers is shrinking and competition for those businesses who do qualify is ferocious - please be careful of offers that sound too good to be true, they probably are!
Rates are stable for now and trending lower, SBA term loans are now available with monthly payments and APR -rates have been closing at Prime+2.5%