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The Fed is trying to slow down hiring to dampen the upward pressure on wage and consumer price inflation, but cooling down the labor market takes time, and while corporate worries about labor shortages have declined, they are still well above pre-pandemic levels, see chart below.
Source: Bloomberg/Michael McDonough, Apollo Chief Economist. Note: Search includes earnings calls, conference presentation calls, shareholder management calls, guidance calls, M&A calls, and sales results calls. See important disclaimers at the bottom of the page.
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US households are in excellent shape, the ratio of liabilities to net wealth has declined 50% since the 2008 financial crisis, and household leverage is currently at levels last seen in the early 1980s, see chart below. If the unemployment rate rises, consumer spending will slow down, but the starting point for US households is very strong.
Source: FFUNDS, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The IMF is forecasting a recession in the UK and Germany, and close to potential growth in the US, which on its own would argue for a stronger dollar, see chart below.
Source: IMF WEO, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Hotel demand has slowed down in recent weeks, occupancy rates, RevPAR, and daily rates have started moving lower, see chart below.
Source: STR, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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There are no signs of weakness in movie theater visits, the weekly data for box office grosses is rising and now above pre-pandemic levels, see chart below.
Source: Boxofficemojo.com, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Weekly data shows that the number of people going to Broadway shows continues to rise. No signs of a slowdown in household consumption of this type of luxury consumer spending.
Source: Internet Broadway Database, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Office occupancy rates have moved sideways for the past six months, and with hybrid work models now well-established, a 50% occupancy rate may be the new permanent level in most metropolitan areas, see chart below.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Data for leveraged loan default rates and bankruptcy filings show that a default cycle has started, see charts below.
This is not surprising. The entire goal of the Fed with raising interest rates is to slow the economy down to slow down inflation, and adding tighter bank lending standards increases the risk that the slowdown could come faster.
Our latest credit market outlook is available here.
Source: S&P Capital IQ, Bloomberg, Apollo Chief Economist. Note: Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities. 
Source: Pitchbook LCD, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Credit conditions have tightened significantly for small businesses after SVB failed, and firms with less than 500 employees account for almost 50% of total employment in the US economy, see charts below. Small businesses borrow from small banks, and it is getting more difficult to argue that the banking crisis is not having a negative impact on the economy.
Source: NFIB, Bloomberg, Apollo Chief Economist 
Source: Census, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Babysitter wages per hour are $25.2 in San Francisco, $24.6 in Seattle, and $23.5 in New York, and the increase in salaries for babysitters from 2021 to 2022 was more than 8% in Seattle, see chart below.
Source: Urbansitters, Apollo Chief Economist See important disclaimers at the bottom of the page.
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