A simple fact is that every economy eventually has periods of reduced economic activity. What is different today is that the last two economic slowdowns (Pandemic and the Great Financial Crisis) were both drastic in intensity. Additionally, The Great Recession was also drastic in how long the pain lingered. This has led many today to behave as if all reductions in the pace of the economy would be catastrophic. Combine that with social media and a sound bite society and we get constantly barraged with doomsday predictions.
The basic elements of an economy are a growing population that produce demand and supply, plentiful natural resources, infrastructure, technology, and sense of security in the environment to produce, distribute, and consume production. Objectively, when in history have these elements been more plentiful than 2023? Yes, things could slow down, but the elements for a successful economy have never been more plentiful and I believe those who see this accurately are not generally inclined to challenge the doomsdayers. Instead, they just go about their business to seize the opportunities while others fret.
------------------------------
Neil Stanley
------------------------------
-------------------------------------------
Original Message:
Sent: 11-27-2023 14:40
From: Rob Blackwell
Subject: Tuesday Topic: What Happens Next?
Confidence among bank CEOs in "nonurban, agriculturally, and energy-dependent portions" of the U.S., measured by the Rural Mainstreet Index (RMI), has collapsed to its lowest level since Creighton University launched the survey in 2006. The RMI results more or less track those of IntraFi's third-quarter Bank Executive Business Outlook Survey (nationwide), where nearly half the approximately 600 banks surveyed said economic conditions had deteriorated over the past year and only 12% expect conditions to improve in the next 12 months. <o:p></o:p>
Will weakening economic conditions push the Fed to loosen policy soon? Sixty percent of respondents to IntraFi's survey think the Fed will start cutting rates in the second half of 2024. Wall Street believes the Fed will start cutting even sooner, to preempt a slowdown. Bankers' and investors' guesses are probably at least as good the FOMC's, and possibly better: Committee members have largely failed to predict central bank rate moves over the past couple years, and now, with voting members increasingly at odds, the committee's target range for 2024 is widening. <o:p></o:p>
But wait … is the economy really weakening? It has been remarkably resilient throughout 2023, despite no shortage of calls such as this one last year from Bloomberg Economics. ("Resilient" is putting it mildly, given the blowout U.S. GDP report for the third quarter.) What if it just keeps chugging along?<o:p></o:p>
What do you think-are we heading for a hard landing, soft landing, or no landing? How has your outlook changed over the course of the year, if at all? Is the Fed going to break something soon, as so many have predicted? When will it start lowering rates? <o:p></o:p>
------------------------------
Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
------------------------------