Recession Might Rise In The U.S. After Bank Fallouts Earlier This Year

An economist who delivered a prescient alarm bout the economy of the U.S.  banking system earlier this year is claiming a long-awaited U.S. recession could finally reach in the months ahead.

Recession Might Rise In The U.S. After Bank Fallouts Earlier This Year (PHOTO: The World Economic Forum)

U.S. Recession May Be Just Around The Corner

Chief of the U.S. economist Steve Blitz, at TS Lombard, claimed in a research note that the recession view remains very much intact as banks rein in lending while companies’ profits appear to have weakened once again during the quarter ending in June.

MarketWatch news reported that some indicators are showing that the U.S. economy is stalling, and the pace of lending growth at small and large Bank fallouts has slowed to nearly zero.

Morningstar news reported that the US Treasury has created a strategy that would issue a flood of T-bills to fill its coffers now that the federal debt ceiling has been increased could shift even more money away from markets and the economy.

The Treasury has already begun the strategy, and it is anticipated to allocate $1 trillion in bills before the end of August. T-bills are Treasury bonds with maturities of between four and 52 weeks.

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Bank Fallouts Are Affecting The U.S. Economy

On Tuesday, the Commerce Department data released that the closely watched measurement of US home-building increased to 21.7 percent in May to a seasonally adjusted yearly rate of 1.631 million, blowing away economists’ expectations for a modest decline.

The drop in railcar loadings of lumber and metal products is a sign that a current uptick in the health of the manufacturing economy is already drowning and even if the US does handle to delay a recession, the Federal Reserve and markets could face other problems, like a resurgence of inflation.

The asset-liability mismatch, in particular, evolved into a major concern when Silicon Valley Bank crumpled into federal receivership a few weeks later, following a disastrous bank run that was brought on by a last-ditch attempt to increase funding.

Economists had expected a U.S. recession fallout would begin as soon as the first quarter of 2023, but so far, the economy has been unexpectedly resilient to the Fed’s interest-rate hikes, even with the central bank having lifted borrowing costs by five percentage points since March 2022.

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