Odd Lots

The Real Pain From Rate Hikes May Still Be on the Way

Sep 28, 2023

Julia Coronado, Founder and CEO of Macro Policy Perspectives and Clinical Associate Professor at the University of Texas, discusses the lagging effects of recent Federal Reserve rate hikes on the economy. She highlights that the pain from these hikes is yet to be fully felt, especially in commercial real estate and refinancing challenges. The conversation dives into the mixed signals from inflation, robust growth, and low unemployment, questioning whether the real consequences of increased rates are just around the corner.

47:28

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Episode guests

Julia Coronado

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Quick takeaways

Higher interest rates may not have had a significant impact yet due to lags, but the credit effects are on their way, particularly in areas like commercial real estate.

Fiscal spending can have disinflationary impacts by driving specific sectors, improving capacity, and facilitating the transition to renewable energy.

Deep dives

The Impact of Fiscal Stimulus on Inflation

The interviewee explains that fiscal stimulus doesn't always lead to inflation and can actually have disinflationary effects. The spending during the pandemic was given to consumers to spend, while the current spending is aimed at capacity-building, such as the renewable boom in Texas. The interviewee also highlights the importance of understanding the purpose and outcome of fiscal spending, as it can drive specific sectors and improve capacity, which in turn can have disinflationary impacts.

The Link Between Deficits and Inflation: Debunking the Narrative

00:33

Intro

2min

Economic Uncertainty and Real Estate Trends

8min

Real Estate Trends in the Sunbelt: The Build It and They Will Come Approach

3min

Navigating Interest Rates and Economic Dynamics

17min

Rising Rates and Consumer Divide

6min

Navigating Low Spreads in Corporate Bonds

7min

The Economic Impact of Rising Interest Rates

4min

Navigating the Complexities of Credit and Asset Markets

3min

Connecting with Listeners and Future Innovations

2min

The Federal Reserve has hiked rates in rapid fashion, yet the evidence of their impact is scarce. Inflation is still hot (though it has come down quite a bit.) The unemployment rate remains very low. And economic growth appears to be robust. So does this mean that higher rates aren't significant? Or could it be that their impact has simply yet to be felt, and that it's still coming. On this episode, our guest argues the latter case that due to lags, we really haven't felt the pain from rate hikes yet. Julia Coronado, is the founder, CEO and president of Macro Policy Perspectives, as well as a Clinical Associate Professor of Finance at the University of Texas McCombs School of Business. She argues that we really haven't felt the credit effects yet from higher rates, but that they're on the way. In particular, we discuss the delayed impact on commercial real estate and other areas of the economy where debt may have been termed out, but will eventually need refinancing.

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Odd Lots

The Real Pain From Rate Hikes May Still Be on the Way

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Impact of Fiscal Stimulus on Inflation

Examining the Credit Channel and Capital Markets Channel

The Role of Fiscal Stimulus in the Energy Transition

The Potential Risks and Implications of Persistently Low Spreads

The Link Between Deficits and Inflation: Debunking the Narrative

Remember Everything You Learn from Podcasts