Quote (dro94 @ Jun 16 2022 12:43am)
A recession is likely but hasn't happened yet. That is just a fact.
In pretty much all areas, the economy is better placed going into a recession now compared to 2007/8:
1) Companies are missing earnings targets mainly due to lack of supply, not lack of demand
2) Unemployment is low and vacancies are at an ATH
3) Household debt is at a much lower rate than it was back then, in part due to unprecedented government support during the pandemic
4) Banks are required to hold a greater proportion of cash in reserve
5) Firms have lower leverage
6) More homeowners are on long term fixed rate mortgages than in 2008, so interest rate rises won't lead to a material increase in delinquencies
My main concern is that in Q1, inflation was centered on energy costs, which is far easier for governments to target by cutting fuel duties or VAT. In the last month we're seeing the CPI creep up in way more categories, which makes government intervention much harder
Overall, the evidence points to a mild recession
Where is the supply chain stopped? Is US out of lockdown?