Plain English with Derek Thompson Could a Housing Recession Take Down the U.S. Economy?
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Nov 3, 2023 Conor Sen, a Bloomberg columnist known for his incisive economic analysis, dives into the state of the U.S. economy. The discussion highlights the surprising resilience of economic growth despite looming threats like high interest rates and a cooling housing market. Sen identifies five major risks to future growth, including the fallout from a recession in apartment construction. He also explores the correlation between rising rates and shifting dynamics in the housing and auto industries, making predictions for 2024 that could shape financial strategies.
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Resilient US Economy
- The US economy defied recession predictions in 2022, adding jobs despite rising interest rates.
- Experts were wrong, attributing this to pent-up demand and low interest rate sensitivity.
Crimped Garden Hose Theory
- Conor Sen explains the economy's resilience as a "crimped garden hose" finally releasing.
- Pent-up demand in labor, oil production, and manufacturing fueled growth despite rising rates.
Insulation from Rising Rates
- Many had locked in low interest rates on mortgages and corporate loans during the pandemic.
- This insulated them from the immediate impact of rising interest rates, further contributing to economic resilience.