Bloomberg News reports that when everyone anticipates a soft landing, it is best to brace for the consequences. This is what the current situation is teaching everyone a lesson, although it is not comfortable for the United States at the moment.
What Was the Summer Like?
It was a summer when inflation was trending lower. As far as jobs were concerned, there were many. Not only that, consumers continued to spend. All these scenarios fostered a lot of confidence.
A last-minute deal to avoid a government shutdown kicks an immediate risk and a little more into the future. However, certain factors have been impacting the GDP growth of the economy. Let us find out these factors. They include a major auto strike, a probable shutdown, and resuming payment of student loans. These may return after the deal lapses in stop-gap spending could shave off a certain percentage of the GDP growth. The same may occur in the fourth quarter.
Other Powerful Forces at Work
Adding to the above woes are a few other powerful forces at work. These include oscillating pandemic savings, surging oil prices, and soaring interest rates. It could be enough to trip the United States into a meltdown soon when all these factors are added.
Bloomberg Economics Base Case
Bloomberg cites 6 reasons why a recession could be impending or lurking large. These are strikes, lurking credit squeezes, mechanics associated with monetary policy, the wiring of the human brain, the higher price of oil, and the resumption of student loan repayment.
Data and history imply that consensus has become a little too complacent. It was a similar scenario just before when there was a downturn in the United States in the last four decades.
