Rhitwiz Tripathi on LinkedIn: What If Fed Rate Hikes Are Actually Sparking US Economic Boom? (2024)

Check out the latest issue of The Real Economy (US)! In the July-August issue, RSM’s economists Joe Brusuelas and Tuan Nguyen offer their outlook for the remainder of the year. They see growth easing to a more sustainable 1.8%, unemployment edging up to 4.2% and the Fed’s preferred measure of inflation easing to 2.3%. It will all set the stage for the Fed to pivot away from its restrictive monetary policy to one that encourages growth. https://rsm.buzz/3YISZsl

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Here's to history not repeating itself. The Federal Reserve has waged a vigilant battle against inflation these past few years. The chart below depicts uncanny similarities among western economies' current inflation cycles to the last giant inflation surge during the 1970s. As financial media eagerly speculate as to future interest rate trends, their focus seems more tied to rates impact on stock market trends. They seem to have lost sight on the broader purpose of rate policy, which is to stabilize the economy. Inflation may seem tamed, but we can't just collectively wish it away.

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I’d be glad to explain why this is all true. For a few because of those rising interest rates, of course. Inflation? Price hikes? Seeet Choli Sauce goes up by 1.5x? Yes, higher interest costs, the I in EBIT and EBITDA. For a fee. As the US economy hums along month after month, year after year, minting hundreds of thousands of new jobs and further embarrassing a long line of experts repeatedly proven wrong on recession calls, some on Wall Street are starting to entertain a fringe economic theory. What if, they ask, all those interest-rate hikes the past two years are actually boosting the economy? In other words, maybe the economy isn’t booming despite higher rates but rather because of them. It’s an idea so radical that in mainstream academic and financial circles, it borders on heresy. But the new converts (along with a handful who confess to being at least curious about the idea) say the economic evidence is becoming impossible to ignore. By some key gauges—GDP, unemployment, corporate profits—the expansion now is as strong or even stronger than it was when the Federal Reserve first began lifting rates. So, with that in mind, here’s how the theory works. —David E. Rovella Bloomberg

Whether interest-rate cuts that the Fed is nearly certain to commence at its mid-September policy meeting will be enough to arrest the emerging economic weakening before it goes too far.

2023's U.S. economy defied recession thanks to strategic liquidity injections and tactical fiscal maneuvers. As we enter 2024, eyes are on the Fed and Treasury for their next steps to maintain this momentum. Will rate cuts and new strategies keep the economy on its upward trajectory? #EconomicResilience2024 📈💡🏦

It looks like the US economy is having a soft landing unless the November 5th results throws the economy under a bus!On the current trajectory it looks like we will see a rate cut by the fed later in the year which will provide a welcome boost for the U.K. economy.Why should something happening in the US affect consumers and business in the U.K.?Well it’s quite obvious from historical evidence the U.K. Bank of England committee will not make any changes until after the Fed has made a change and it’s sort of an unwritten rule!So despite other economies reducing their central bank interest rates such as the ECB the U.K. has not.Interestingly this Reuters article alludes to changes in interest rates taking up to two years to affect the market and the last change by the FED was 12 months ago so its effect may not be seen for another 12 months.If we have a system lag of up to 2 years for interest rate changes we need to perhaps take this into account as the total lag from negative to positive change could be up to 4 years and the system will go from boom to bust in an uncontrolled state!It’s clear the UK interest rates should have been reduced by now but haven’t so what is the Bank of England waiting for? Inflation going to 1% or x number of businesses going to the wall so unemployment goes through the roof?I urge the committee to take a leadership position and serve the people ie; tax payers that pay their wages to optimise their role and make the U.K. successful rather than pulling a salary waiting for others around the world to set the trend before making a decision.Am I being too harsh or just frustrated at how our leaders operate managing decline in the U.K.?https://lnkd.in/eXKdAv-Y

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'soft landing' refers to a scenario where the economy slows down just enough to curb inflation without triggering a recession. It's like gently tapping the brakes on a speeding vehicle to avoid a sudden stop. The goal is to achieve a perfect balance - slowing economic growth to control inflation while still maintaining employment and income levels.How does it work? Central banks, like the Federal Reserve in the U.S., play a pivotal role. They might adjust interest rates, influencing borrowing costs to moderate spending and investment. It’s a delicate dance of monetary policy adjustments to ensure the economy cools off but doesn’t freeze.But why do governments aim for a soft landing? It's simple: to maintain economic stability. A hard landing, where the economy rapidly descends into a recession, can lead to increased unemployment and financial hardship. In contrast, a soft landing aims to prolong economic expansion while keeping inflation in check, ensuring a stable environment for businesses and consumers alike.The concept of a soft landing is crucial for investors, business leaders, and policymakers to understand, as it shapes the decisions that drive our economy forward.How do you see the concept of a soft landing influencing your sector and your country? Share your thoughts below.#EconomicPolicy #SoftLanding #FinancialStability #InflationControl

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📉 Decreasing Inflation and Fed Rate Cuts: Could We Achieve a Soft Landing? 🌟As inflation begins to ease and the Federal Reserve contemplates rate cuts, the possibility of a "soft landing" for the economy is drawing attention. What does this mean for our financial future?In my latest blog, I explore the implications of decreasing inflation and potential rate cuts, analyzing how they might stabilize the economy without plunging us into a recession. Discover how these factors could impact businesses, consumers, and the broader economic landscape.🔗 Read the full blog here: Decreasing Inflation and Fed Rate Cuts Could Lead to Soft Landing#Economy #Inflation #FedRateCuts #EconomicOutlook #FinancialStability #SoftLanding

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A Bigger Rate Cut in September Could Spell Trouble for Markethttps://lnkd.in/eUwQmmZr#InterestRates #RateCuts #StockMarket #Economy #FederalReserve #MonetaryPolicy #RecessionFears #LaborMarket #Inflation #Investing #Channelchek

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It is hard to ignore how resilient the economy is in the face of higher interest rates. All of the recession rhetoric is in the rear view mirror now. Are we heading toward more growth assuming rate cuts sometime in the near future ?

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