Recession in 2024?
Posted December 29, 2023
Will the United States fall into Recession in 2024?
Trends in Credit Growth suggest it will.
It is important to monitor and forecast trends in Credit Growth because Credit is the fuel that drives our economy.
The new Macro Watch video, uploaded today, provides a credit update based on data released in The Financial Accounts Of The United States for the third quarter of 2023.
It shows that:
- The growth in Non-Government Debt is slowing sharply;
- Total Credit Growth is weakening; and
- Total Credit Growth adjusted for Inflation has been below the 2% Recession Threshold for eight quarters.
These trends suggest there will be a Recession in 2024.
The video also shows that Wealth in the United States is surging. Household Net Worth has increased by $34 trillion over the last four years. To put that into perspective, $34 trillion is more than enough to finance all US Government Debt outstanding.
However, income growth has not kept pace with the increase in Wealth. Consequently, the Wealth to Income Ratio is exceptionally high, indicating that asset prices are stretched and vulnerable to a sharp correction should any shock – or even any disappointments – arise.
Against this backdrop, will the Fed cut rates as much as the market expects in 2024? Will Quantitative Tightening continue? What would it take for the Fed to launch a new round of Quantitative Easing?
The video concludes with a discussion of how the stock market is likely to perform as the new year unfolds.
For all the details, Macro Watch subscribers can log in and watch this 20-minute video now. There are also 56 slides that subscribers can download.
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