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Posted On Monday, 26 June 2023 21:48
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I don’t know if it will get called a recession or not, we no longer have a technical definition that is valid since the last two consecutive quarters of negative growth happened and people felt it didn’t suit their political agenda, so they just ignored it and said it wasn’t so; but call it what you want, it is what it is. What I can tell you is that the signs are not looking good. The job market is slowing down, and people are not finding new jobs as quickly as they once did. Wage pressure is decreasing, and many people are fighting going back to the office so they will risk termination over heading back to a building.

Other signs point to some real issues. Vehicle repossessions are rising rapidly, and some banks and credit unions are paying high premiums to repossession agents to move to the front of the line so they can get the cars back quickly and get them sold off before the used car market plummets! The key here is that since all the free money has dried up, and the child tax credit has gone away, people can no longer fit their car payments in their budgets when coupled with the higher prices’ inflation brought us. Add to this situation the soon to be reinstatement of student loan repayment obligations and you will see further struggles of those who have borrowed money that they can’t or won’t pay back. If they do manage to pay for their cars and their loans, those people will have greatly reduced disposable income and the pain of that loss will be felt across the board. This will put pressure on GDP and call it what you may, it will certainly FEEL like a recession.

The good news will be that the slowing economy will eventually force the FED to stop raising rates and put some much-needed downward pressure on interest rates. Despite what some might think, I believe we are either at the top or close to the top of the rate cycle and will see a slow but steady decline in mortgage rates into the fall and possibly beyond. Now don’t get all excited, we aren’t going back to 3%, but I think we can settle into the 5’s pretty comfortably for at least a little while. But hey, what do I know?

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