U.S. debt has hit over $30 trillion. While most may shrug off that statistic, the real issue is that the debt has been growing faster than the national income for decades.

Simultaneously, most government debt has been financed in short-term bills and notes of up to two-year durations. That’s kept the cost of financing government spending low. Now, with interest rates closing in on 5 percent, the cost to service that debt is about to explode.

That could create a debt crisis. If that happens, any potential “soft landing” for the economy could go out the window. A steep recession could result instead.

Meanwhile, Congress is dealing with the debt ceiling. That simply sets a statutory level on how much debt the government can borrow. That does nothing to address the problem of growing debt or rising debt costs.

A few solutions may be necessary. First, the U.S. government could issue longer-term debt beyond a 30-year period. Second, the government may have to raise taxes to deal with higher debt payments, even if that slows the economy. Third, government spending would have to decline.

A combination of those factors would be the least painful. But pain is coming. And it’s likely that politicians will avoid any painful decision until one has to be made.

Much like the credit crisis of 2008, swift action may prove a short-term solution that still leaves long-term structural issues in place.

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During a market decline, the conventional wisdom is to avoid catching a falling knife. But what about when a stock moves higher?

One example is Facebook (META). Shares lost nearly two-thirds of their value in 2022. At their worst, shares were down 75 percent from their high. Yet since the start of the year, the stock has jumped over 50 percent. A big chunk of that move came when the company reported earnings.

Is this just a move off the low – known on Wall Street as a “dead cat” bounce? Or is it the start of a new rally? If it’s the latter, early investors have already been well rewarded. Those who pile in now won’t get as good of a return.

One way to answer those questions is to look at market sentiment. Are traders still bullish or bearish overall? Generally, investors are still bearish at the moment. That points towards more of a bounce than a new rally.

Time will definitively tell either way. For investors, it’s important to remember that nobody will time the exact top or bottom in a stock. It’s about buying when there’s a relative value and chance for a move higher. And selling when a stock looks overvalued.

Investors who are “in the ballpark” on those moves can still make great returns.

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There are many signs of a slowing economy. One of the trends that matters most to policy makers like the Federal Reserve is the unemployment rate. That’s because if consumers cut back spending, they may increase their spending in the months ahead.

But for those out of a job, it’s likely that their spending will be curtailed for months until they are able to find a new line of work.

That’s a stronger way of ensuring that the economy slows and inflation rates come down – and stay down.

So some are pointing to the rise of layoffs in the tech space as a sign that the economy is starting to cool. Big tech companies employ thousands of workers. So when they lay off even 5 or 10 percent of their staff, it has a bigger impact than at other firms.

In total, the past few weeks have seen over 200,000 announced layoffs at tech firms. These tend to pay substantially higher salaries than average.

But it’s not as bad as it sounds. These workers are getting months of severance pay, and continued health care for months as well.

With smaller tech firms looking to pick up talent from big-name companies, chances are this may not be as strong a sign of a recession as in the past. But it is a sign, and investors should wait and see how these tech companies operate with a smaller staff before investing.

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Investors have had life in “easy mode” for some time. That’s thanks largely to ZIRP, or zero interest rate policy. Interest rates are the cost to borrow money. That rate should be positive, to reflect that those lending are giving up purchasing power today.

Most of the past decade and the pandemic, however, saw interest rates at 5,000 year lows. That made it easy for anyone to borrow money with nearly no interest payments.

That fueled a more lavish lifestyle than would have happened at a higher level of interest rates. It also created more money overall in the financial system than there would have been.

Today, that trend is reversing. There are far higher costs to borrowing money. It’s high relative to the past decade, although it’s still on the low side historically.

With a higher cost of money, investors need to rethink the valuations of different assets. Early-stage companies with no revenues or commercially-viable product or services are worth far less to potential investors. So are fully-developed companies.

Chances are this trend will continue. That makes it a time for investors to be incredibly selective in what they’re buying. And to avoid high-growth stories right now, given the higher risk of failure without plentiful access to cheap capital.

While things are getting tougher out there, there are still plenty of chances to do so.

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