The Resiliency of the US Economy in the Face of Higher Interest Rates

Despite recent bond market sell-offs and concerns over inflation, the US economy has proven to be surprisingly resilient to higher interest rates. While the Fed has been gradually raising short-term interest rates for 18 months, long-term rates have only recently begun to rise. This tightening cycle may have just started. Furthermore, despite headline risks such as a looming government shutdown and the UAW strike, the US economy has shown resilience. Consumer spending has remained strong, with different segments of consumers exhibiting varying spending patterns. Additionally, the labor market has experienced significant changes, with new hierarchies of jobs emerging and employers struggling to catch up with the shifting dynamics.