Post by account_disabled on Feb 20, 2024 8:45:34 GMT
The U.S. economy is estimated to have grown at a rate of 3 percent or more this quarter, a pace as dizzying as it was unforeseen. Economists had not predicted a recession before last year, but then most began to think that a slowdown in the United States was inevitable, as a result of rising interest rates. Instead, we got a mini miracle of growth. So what happened? Popular explanations include historically large spending by the Joe Biden administration and unsinkable American consumers, buoyed by booming oil prices and the AI wave. Putting these factors together goes a long way toward explaining the unusually mild impact of the Fed's tightening so far. Last year, everyone got caught up in one story: central bank interest rate hikes.
These typically slow the economy and were in fact producing signals – including an inverted yield curve – that have reliably preceded recessions in the past. The tightening began in March last year, and Job Function Email Database while it typically takes about 18 months to materially cool the economy, the rate increases came so quickly that most forecasters estimated growth would slow sooner. That underestimated the unsinkable consumer. Since the last real recession, in 2008, Americans have reduced their debt load and put their finances on stronger footing. The proportion of debt they hold at fixed rates rises to around 90 percent, from about 75 percent. And the tightening has not yet increased your interest payments, although the Federal Reserve may not be done, based on signals from last week.
The average mortgage holder in the United States continues to pay 3.6 percent, half the going rate on new mortgages.Many American consumers still had stimulus cash on hand at the beginning of this year. Some pandemic programs remained surprisingly active, including tax credits of up to $20 billion a month to help companies retain and insure their employees. Early in Covid, the government suspended student loan payments, putting up to $8 billion a month in the pockets of young people, and that program doesn't end until next month. The big boost, however, came from the relief checks and other savings that Americans had accumulated during the lockdown.
These typically slow the economy and were in fact producing signals – including an inverted yield curve – that have reliably preceded recessions in the past. The tightening began in March last year, and Job Function Email Database while it typically takes about 18 months to materially cool the economy, the rate increases came so quickly that most forecasters estimated growth would slow sooner. That underestimated the unsinkable consumer. Since the last real recession, in 2008, Americans have reduced their debt load and put their finances on stronger footing. The proportion of debt they hold at fixed rates rises to around 90 percent, from about 75 percent. And the tightening has not yet increased your interest payments, although the Federal Reserve may not be done, based on signals from last week.
The average mortgage holder in the United States continues to pay 3.6 percent, half the going rate on new mortgages.Many American consumers still had stimulus cash on hand at the beginning of this year. Some pandemic programs remained surprisingly active, including tax credits of up to $20 billion a month to help companies retain and insure their employees. Early in Covid, the government suspended student loan payments, putting up to $8 billion a month in the pockets of young people, and that program doesn't end until next month. The big boost, however, came from the relief checks and other savings that Americans had accumulated during the lockdown.