Insightful Articles

The economy expanded at 4.9% in the third quarter, fueled by robust consumer spending, even as savings dipped below pre-pandemic levels. The Federal Reserve Bank of New York's report highlights a 1.3% increase in household debt, reaching $17.29 trillion. Notably, credit card debt jumped to $1.08 trillion, a significant rise attributed to heightened spending and real GDP growth. With delinquency rates creeping up, especially among those in their thirties, and higher borrowing costs affecting the housing market, the financial landscape is complex. As debt servicing consumes more income, the potential for economic slowdown looms, presenting both challenges and opportunities for prudent financial management and preparation for the next economic phase.

Is the S&P 500 really entering a new bull market? Today's video challenges this idea, highlighting how small caps, usually the leaders in a new bull phase, have lagged significantly. Tune in for an alternative perspective on current market trends.

The 30-year mortgage has hit 8% for the first time since 2000. Rising mortgage rates, along with increased interest on auto loans and credit card debt, shift money that consumers might otherwise spend on discretionary items to debt service. Over time, these higher interest rates are likely to slow economic activity. The big question is, will the economy merely slow down, or could we be heading toward a recession?

In the recent economic data release, the Department of Labor highlighted a steadfast count of initial unemployment claims at 209K, reflecting the continuing tightness in the labor market. This announcement came hand in hand with a subtle decline in the four-week moving average of claims by 3K, instilling a sense of stability amidst customary weekly fluctuations. Concurrently, inflation, as depicted by the Consumer Price Index (CPI), edged up by 0.4% month-over-month and 3.7% annually, slightly outpacing the forecasted 0.3% and 3.6%. This nudging upward trend underscores the entrenched nature of inflation, marking a critical juncture for the Federal Reserve as it navigates the delicate balance of curbing inflationary pressures while fostering economic growth. With a historical lens focused on the 1970s inflation saga, the anticipation builds around the Fed's strategy in the upcoming November or December meeting, potentially heralding another rate hike in response to the evolving economic tableau.

The Bureau of Labor Statistics unveiled the September Producer Price Index (PPI) today, casting light on the inflation landscape at the wholesale level. The PPI ascended by 0.5%, overshooting the projected 0.3% rise, with the upswing chiefly propelled by escalating costs of food and energy products. On a year-over-year basis, the unadjusted PPI climbed by 2.2%, illustrating a discernible trend over the past four months. This trajectory insinuates that wholesale inflation is on a reacceleration path, potentially foreshadowing upcoming ascents in consumer prices as heightened production costs typically trickle down to consumers.

The yield curve has been sounding the alarm bells for over a year, pointing to an upcoming recession. Though we can't predict the future with absolute certainty, historical patterns suggest we may be on the cusp of an economic downturn. The inversion of the yield curve—a long-standing harbinger of recessions—paired with other economic indicators, forms a cautionary tale worth heeding. Below, we'll delve into the data, revisiting patterns from the past 40 years and the troubling echoes we see in today's market.