Current Business Cycle: Income Driven vs. Credit Driven

The current business cycle is characterized as an income-driven cycle rather than a credit-driven one. Unlike past cycles, such as the one in 2008 where borrowing significantly supported economic activity, individuals today are financing their spending largely through income growth, which is increasing by about 4% to 5% annually. This trend indicates minimal reliance on debt, as household borrowing levels are reminiscent of recession conditions. Consequently, this results in a more stable and sustainable economic expansion since households are not accumulating excessive liabilities that could lead to economic downturns.