One cost of the debt ceiling crisis that is lost among most political actors and the public is that the U.S. Treasury will need to refill its coffers. That need to sell debt—$1.1 trillion of it—along with a strong probability of another Federal Reserve rate hike or two during the third ... READ MORE >
Joseph Brusuelas
The wealth effect and the Great Resignation
Three years after the pandemic upended the American economy, U.S. household balance sheets in general are in good shape. Assets far outstrip liabilities, with household net assets surging over the past decade to nearly $150 trillion last year. Underneath this strength, though, there is a ... READ MORE >
Economy added 339,000 jobs in blowout May employment report
The labor market and the economy it supports will just not go gently into that good night despite policy efforts to cool both. Historic inflation and interest rate shocks have not yet derailed a robust labor market that has averaged an increase of 283,000 jobs over the past three months. ... READ MORE >
RSM US Manufacturing Outlook Index: Downturn continues
The RSM US Manufacturing Outlook Index dropped by two standard deviations below normal in May as firms reported decreases in both current shipments and new orders. This is consistent with the modest year-over-year decline in industrial production. Our index is based on surveys of manufacturing firms ... READ MORE >
The debt ceiling agreement and the financial health of the U.S.
President Biden and Speaker Kevin McCarthy reached an agreement over the weekend to lift the debt ceiling by more than $4 trillion until 2025, narrowly avoiding the financial turmoil that would have ensued following a default. Because of the approximately 10% increase in fiscal year 2023 ... READ MORE >
Fitch puts U.S. on ratings watch negative
The announcement on Wednesday that Fitch Ratings had placed the United States AAA credit rating on “Rating Watch Negative” is the latest sign that the policy brinkmanship over raising the nation's debt ceiling is extracting a growing price on the U.S. economy and jeopardizing well-functioning ... READ MORE >
RSM US Financial Conditions Index: Debt ceiling standoff to cause volatility
U.S. financial conditions remain a drag on overall economic activity. Our composite RSM US Financial Conditions Index remained at 0.9 standard deviations below neutral on Friday, corresponding to higher levels of risk than would normally be priced into securities. As investors await a ... READ MORE >
About that recession: Resilience now, risks ahead
We have made the case for some time that the “R” word that best describes the American real economy is resilience, not recession. Despite elevated inflation and interest rates, as well as tightening financial conditions and softening demand for loans, the economy has chugged along, thanks ... READ MORE >
Inflation remains sticky in April, rising by 4.9% over a year ago
Strong demand for transportation and gasoline in April bolstered by rising incomes and excess savings showed that inflation, while easing, is likely to remain sticky for the foreseeable future despite falling to 4.9% in April from 9.1% last June. April’s increase in the consumer price index ... READ MORE >
What would happen if the government defaults on its debt?
Another debt ceiling crisis is approaching, and it is in no one’s best interest. Policy brinksmanship over lifting the debt ceiling and the threat of default it brings is increasing the cost of doing business and carries far more risk than is commonly acknowledged. At its core, the stand-off ... READ MORE >