© Reuters
Investing.com – Chief global strategist Albert Edwards warned that the U.S. economy is in dire shape, as evidenced by rising bankruptcies and deteriorating credit conditions. writes Business Insider.
The unemployment rate in the US today is 3.8%. In September, 336 thousand jobs were created in the country. The index has increased by 7.6% since the beginning of the year. And the country’s GDP rose a whopping 4.9% year on year in the third quarter, despite the Federal Reserve’s tough policy of raising rates.
“I recognize that the macro data obscures the depth of the pain the Fed has caused the economy, and that will soon become clear to everyone,” Edwards said. — Let’s start with data on bankruptcies. Year to date, there are more bankruptcy filings than any year since 2010. This year alone they grew by 61%. And it’s worse for smaller firms, which have smaller cash reserves and are more sensitive to higher interest rates.”
Edwards acknowledged that only generous government aid to households and small firms during the COVID-19 pandemic has kept them afloat. Now, however, the sharp rise in rates has caused a surge in bankruptcies beyond our worst nightmares.
True, as he himself admitted, only 40% of the ratings of companies in the S&P 500 index are overvalued, while in new economic cycles this figure is usually 60-70%.
Credit conditions for small businesses have also deteriorated significantly, and not every company will now be able to get the money it needs from the bank, as evidenced by the National Federation of Independent Business Small Business Credit Conditions Index, which is at recessionary levels.
As for whether a recession has actually arrived, the expert gives a mixed answer – it is increasingly difficult to talk about its occurrence in the near future, since economic data strongly suggests otherwise, although classic leading recession indicators continue to suggest that a recession is still ahead.
— Materials from Business Insider were used in preparation
Read us in Telegram and “In contact with”.
2023-10-30 12:17:00
#Expert #warns #economic #collapse #strong #performance #Investing.com
