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Wall Street analysts and economists have always had a tendency to fall in love with their forecasts . They do not like to admit that they are wrong, and even when the evidence against them piles up, many remain steadfast. This stubbornness explains why Wall Street has such a hard time abandoning the idea that recession is just around the corner . As recession forecasts remain unfulfilled , explanations are always given for this delay. Strong job growth? It is a sign of the end of the cycle. A rally in US equities? We also had a big rise in mid-2008. Is housing rebounding? Only because there are few homes available . Although analysts have been saying for more than a year that recession is imminent , none of the arguments on which the predictions are based hold up. But they can no longer continue stating that there are less than 6 months until it arrives.
The reasons to be optimistic about the US economy continue to grow, and it is time for the doomsayers to admit defeat. The stopwatch of the economic end of the world has been reset. Bear Growls (Bassists) In the last year, the arguments of the most pessimistic about an imminent recession have changed. First was the rebound in food and energy prices; then, the housing market , and, now, the steep rate hikes that many said the economy could not withstand . Despite this Cyprus Phone Number List change in discourse, it is important to reflect on the arguments of the bears to better understand why they announce an economic catastrophe in such an exaggerated way. One of the indicators most used by advocates of a recession is the slowdown in bank credit . Data shows that banks are tightening their lending criteria , so fewer and fewer people and businesses have access to credit.
When this tap is turned off, it is argued, retail spending and business investment will fall, thus cutting off the main engine of economic growth. But I think this theory raises a couple of problems. First, bank credit is a late indicator: the loan growth rate tends to peak when the country is already in recession and bottom out when the recovery has already begun. As far as we know, this slowdown in bank lending is a response to the slowdown in growth last year and tells us nothing about the future. Secondly, standards for lending to small, medium and large businesses have which has generally performed above expectations during the same period. Wall Street investors are wrong to bet on recession, and it will cost them dearly Wall Street Illustration This disconnect between lending and the economy's real performance could be because the post-pandemic cycle is being driven by rising incomes rather than rising credit balances.
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发表于 2024-2-14 16:23:22