Article source: ConstructConnect
Where are we on the recession watch? In a nutshell, the flow of events is confusing. There are certainly reasons to suspect slower economic times are heading our way, and the difficulties that have arisen in the banking sector have done nothing to lighten the mood. Although, in a strange and unexpected twist, financial sector turmoil may be serving a beneficial purpose through causing the Fed to become more restrained in its interest rate tightening measures.
The latest rate hike was just 25 basis points (where 100 bps = 1.00%), only half the 50 bps climb that was taken for granted each time in 2022. The upper limit for the federal funds rate is now 5.00%, which many analysts (me included) think is restrictive enough. It establishes a key policy-setting rate that has gone beyond merely ‘neutral’.
Banking distress can perhaps be characterized as one of those ‘unintended consequences’ that arise from time to time when there is a shift in governing frameworks. But the Fed has an intended consequence in mind, a deceleration in GDP and a lifting of the unemployment rate, that is taking on the appearance of being unnecessarily punitive.
Without further ado, let’s proceed to an examination of some of the most recent information on the economy appearing in public and private sector data releases.
