I was sure the economy would collapse in 2022 as Central Banks worldwide raised their interest rates. The Federal Funds Rate in the USA has risen to 5.25%, marking a rise of almost 4% sinceast June.
All signs point to a disjointed and "booming" economy. Unemployment is at 3.7% officially, after reaching a low of 3.4%. Egg prices are down, and the stock market index S&P 500 touched a bullish pattern this week. Amazing.
Despite over a trillion dollars in credit card debt, record unaffordability of housing and stealth layoffs, things look good. Geopolitical instability from the Ukraine to Sudan threatens to drop a black swan on the market. To top it all off, the SEC has declared a list of cryptocurrencies to be secuitires and Binance and Coinbase are in the crosshairs. Customers have trouble taking money out of the new Apple/Goldman Sachs account and inflation is still an icky 4.6% this year.
Shit is confusing.
Corporate profits have been down some 6% this quarter, and AI-related stocks that threaten our jobs are doing well. Retailers have been hit hard, with Home Depot reporting a revenue loss not seen for 20-years. Oh, and student loan repayment begins at the end of Summer, with an average payment to resume at $400. Our consumer economy is being threatened by increasing debt repayments on credit cards, auto loans and now student loans, so shit could get choppy as fuck as we head into the latter half of 2023.
Is this a slow-moving collapse?
I think we are seeing this in real time. Threats are everywhere, and this time I don't see a way out. The FED is going to make their rare-hike decision next week. It's an 80% probability they won't raise rates to 5.5% next week, but will they pivot? No, they cannot because their charter is to support stability in pricing, which is threatened by record inflation. And now that money is more difficult to borrow and more consumers are going into credit card debt we are awaiting the other shoe to drop. Layoffs will be the final nail in the economic coffin.
Get ready folks. Poop is about to hit the oscillating device. Don't be distracted by these rumors of aliens.
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