America’s economy enters 2025 in great shape

2 comments

1. Overall, agree it is in good shape. More positives than negatives, but it’s rarely (if ever) all positive or negative. A few areas I’m watching as potential concerns (of varying degrees):

   1) credit card and auto delinquencies – while mostly due to lending from card/auto companies to riskier borrowers from 2021-2022, seeing these levels increase markedly is worth watching
   2) inflation – remaining stickier than expected as the Fed starts to cut
   3) real wage growth – cumulatively at -1.1% since Nov 2020
   4) debt/GDP levels – well over 100%, unlikely to be a short term issue but will be a massive long term issue
   5) commercial real estate – higher yields, among other things have pushed cap rates higher, which have decreased CRE values. Coupled with higher cost of debt servicing as many of these properties come up to renew their loans in the next couple of years worth watching
   6) Discretionary sector sluggish – Target’s recent quarter was a disaster and it was not alone in cutting outlook for consumer spending
   7) the recently uninverted yield curve – it’s not the inversion of the yield curve that typically signals a recession, it’s once it uninverts and the Fed starts cutting rates

2. Didn’t we just have an election a couple weeks ago about how bad the economy is/was?

   I guess a lot changes in a couple weeks.

   Or maybe just maybe that wasn’t what that election was actually about?

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