Cost of borrowing and inflation pose challenges for households and businesses

  • Recession worries reemerge as high interest rates weigh on the U.S. economy
  • High inflation over the past three years remains a big drag on the economy
  • Over half of Wall Street economists now think a downturn is likely next year
  • Even forecasters who don’t see a recession predict a prolonged period of below-trend growth
  • High interest rates have curbed demand for big-ticket items and made borrowing more expensive for businesses
  • Rising unemployment would be a clear sign of trouble for the economy
  • The Fed’s fight against inflation is crucial to the economy’s stability
  • Consumers are feeling the strain of rising costs of living, with delinquencies on auto loans and credit cards on the rise

The U.S. economy is facing renewed concerns of a recession as high interest rates and persistent inflation weigh heavily on households and businesses. Over half of Wall Street economists now believe a downturn is likely next year, while others predict a prolonged period of below-trend growth. The surge in interest rates has curbed demand for big-ticket items and made borrowing more expensive for businesses. Rising unemployment would be a clear sign of trouble for the economy, although the labor market remains strong. The Federal Reserve’s fight against inflation is crucial, as the rate of inflation is still above the central bank’s target. Consumers are feeling the strain of rising costs of living, with delinquencies on auto loans and credit cards on the rise. The economy’s stability hinges on the Fed’s ability to control inflation and address the challenges posed by high interest rates.

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Key People: Eugenio Aleman (Chief Economist at Raymond James), Matthew Martin (U.S. Economist at Oxford Economics), Priscilla Thiagamoorthy (Senior Economist at BMO Capital Markets), Jeffrey Roach (Chief Economist at LPL Financial)

Factuality Level: 7
Justification: The article provides information from economists and experts about the potential for a slowdown in the U.S. economy in 2024. It mentions the possibility of a recession and the factors that could contribute to it, such as high interest rates and inflation. The article also discusses the impact of these factors on consumer spending, business investment, and employment. While the article presents opinions and forecasts, it does not contain misleading information or sensationalism. However, it could benefit from more data and analysis to support the claims made.

Noise Level: 6
Justification: The article provides some analysis of the potential economic slowdown in 2024 and discusses the factors contributing to it, such as high interest rates and inflation. However, it lacks in-depth data or evidence to support its claims and does not provide actionable insights or solutions.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the potential for a sharp slowdown in economic growth, which could impact financial markets and businesses.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article does not describe any extreme events, but it does discuss the potential for a recession and the impact of high interest rates on the economy.

Reported publicly: www.marketwatch.com