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Originally Posted by Slava
I’m not sure there’s a recession imminent. Honestly, we’ve heard about the imminent recession for about 18 months now. At what point is that call just wrong? Eventually, we’ll have another recession, but it’s hard to say when that happens. Things could slow, not technically recede, and then we recover?
It’s an incredibly interesting time though. The consumer is strong, spending money and job losses are low along with unemployment. On the other hand, rates are rising, lending is slowing and there are deflationary factors as well.
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The Euro zone is now officially in recession. We might just be lagging by six months.
One factor in this resilient economy that I think gets overlooked is the unprecendently large savings that households built up during the pandemic. They’ve been gradually drawn down over the last 18 months (by the home reno boom, ‘revenge travel’, etc), fuelling consumer spending. But we still have a ways to go before savings decline to pre-Covid levels.
I expect when that happens, along with mortgages rolling over at higher rates, we’ll see a real constriction of the economy and a recession.