Wall Street investors remain braced for a recession. But a turndown hasn't yet materialized, due to strong demand from U.S. consumers. Spending makes up roughly 68% of the U.S. economy. It's remained strong amid high inflation as high-income Americans draw down generous savings accrued in the pandemic. Lower-income Americans who may have exhausted their pandemic savings are increasingly turning to credit cards to finance daily life.I'm recycling my reaction from Wall Street Journal and CNBC explain 'Why a 2022 Recession Would Be Unlike Any Other'.
The GDP numbers may signal a recession, but consumers and possibly even businesses aren't showing signs of it. We may end up having a "Wile E. Coyote moment" where both look down and realize they are over an abyss and then start falling, but that hasn't happened yet.That didn't happen while GDP was decreasing during the first half of last year and it hasn't happened since, but we might get one for political reasons instead of economic ones because of the debt ceiling fight.
May we not get what I feared twelve years ago, when I channeled Monty Hall.“Ladies and gentlemen, it’s time for today’s Big Deal. Today’s Big Winner can keep the sugar-coated Satan sandwich he just won, or he can trade it in for what’s behind our three doors. Behind one of them is a clean raising of the debt ceiling and the expiration of the Bush tax cuts. Behind another is a balanced budget amendment. Behind the third is a sovereign default. So, Big Winner, will you keep your prize, or trade it in for what’s behind Door #1, Door #2, or Door #3? Which do you choose?”I followed up the next day by writing "We decided to keep the Satan Sandwich...Maybe next time we'll pick what's behind Door #3." Good lord, I hope not, but it looks more likely than a dozen years ago.
I leave my readers the following meme, which I use whenever the U.S. is about to bump its head on the debt ceiling.
May Debt Ceiling Cat be watching negotiations that result in a something other than a sovereign default, which will send the country, if not the world, into an avoidable recession.