There are cyclical, structural, and policy reasons why the US economy continues to be so strong, see chart below.
The Fed is pressing harder and harder on the brakes, and some indicators are starting to soften in the background, see also the Daily Spark yesterday.
But we are not there yet. The economic data is slowing down and inflation is slowing down. But core inflation is still too high and sticky at 5%.
As a result, the Fed will continue to step on the brakes until they get what they want, namely slower growth and slower inflation.
But the harder the Fed steps on the brakes, the higher the likelihood that we will see a sudden stop in bank lending, capital markets issuance, consumer spending, capex spending, or a correction in financial markets.
Source: Apollo Chief Economist
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