- Stephanie Pomboy, a consumer and business expert, says that rising prices and rates of interest are putting pressure on both consumers and companies.
- Macro Mavens’ chief economist says businesses are under pressure to cut costs and their disposable incomes are decreasing.
- Robert Heller (a former Fed governor) predicts that the recession will begin in late 2024 or at the end of this year.
American households and businesses are being squeezed hard by inflation and steeper borrowing costs — and the pain is far from over, a veteran analyst has warned.
Housing, healthcare, food and energy are now the top four budget items for consumers. Forcing them to cutbackStephanie Pomboy discusses discretionary purchases Fox BusinessOn Friday. She said that the overall consumer spending in recent months has been buoyant, but retail sales are barely moving.
Macro Mavens president and founder said businesses are also suffering from a “migraine,” in the form increased debt costs. Interest expenses for S&P 500 companies have surged 71% over the last year to reach their highest level since 2008, she continued.
Pomboy stated that “expect rates will dampen the economic activity and create real stress on credit markets, especially corporate credit markets.”
Wall Street analysts claim that profits for corporations bottomed out last quarter and will grow by double digits next year.
Pomboy replied, “Nothing in my view suggests that.” She mentioned the increasing pressure on consumers, the limited labor supply, and strikers driving up costs to companies through higher wages and settlements.
Pomboy is known for her grim predictions. In March, she The bursting of a “everything-bubble” could cause stocks to plummet by 30 percent and trigger an economic collapse similar to 2008.
Inflation surged to a 40-year high of 9.1% last summer, spurring the Federal Reserve to hike interest rates from nearly zero to north of 5.25% today — a 22-year high. The Federal Reserve can reduce the pressure on inflation by increasing interest rates. This is done by encouraging savings over spending, hiring and investing. However, they can also stifle demand, increase the unemployment rate, drag down asset values, and cause a depression.
A number of commentators, such as Nobel Prize-winning economist Paul Krugman have The following is a list of proclaimedThe inflation threat is no longer a concern. They believe that the Fed will be able to pull off a soft-landing, which would limit price increases without ruining the economy. Others are not convinced.
Robert Heller is a former Fed Governor who said, “The Federal Reserve has really slowed down the economy. It has its foot on brakes.” Fox BusinessIn a separate Friday interview.
Professor and retired banker, Anita Bhatt, noted that government spending has offset the tighter monetary policy of the central banks.
He said, “That is the foot on gas pedal. That has prevented us so far from going into recession.”
Heller predicted the current fiscal spending would not continue. He predicted that a recession would hit at the end of this or early next year.
