Game of Trades: This Time Is NOT Different

In 2022, most economists predicted a recession within the next 12 months later. Some predictions were mild. Others weren’t. Either way, none of those predictions came to pass in the time predicted.

However, there are several factors weighing on the economy that could cause a recession to hit in 2024. Given the lag time between a policy change and its impact on the economy, we could already be in one now.

For instance, while the unemployment rate has held up well, it’s started to trend higher. That’s been the goal of the Federal Reserve.

The central bank is fighting inflation. And one way to ensure inflation gets down and stays down comes from the reduced spending demand of out-of-work consumers.

The Fed’s tool has been interest rates. They’ve raised at their fastest pace in over 40 years.

And that’s restricted bank lending, which also revealed some weaknesses in the banks. Such weaknesses could return and impact markets in 2024.

The rapid increase in rates has also largely frozen the housing market. Existing homeowners don’t want to move, as it means going from a 3 percent mortgage to nearly 7 percent  at today’s rates.

The bottom line is that none of the dangers to the economy that existed at the end of 2022 have changed. 2024 could see some of those dangers rear their head.

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