Financial markets are in upheaval, albeit stocks are off their lows. Bonds reflect a substantial risk premium to hold both US Treasuries and corporates. Most importantly, expectations for future growth are falling fast. Even the adjusted GDP now is signaling zero growth. This is an analytic nowcast measure for growth that is below the Blue Chip forecasts. Private investment growth has fallen about one point since the election, and the consensus is that we will have a hard landing in the next 12 months.
Forecasts have been wrong in the past, yet the strong consensus should impact spending and investment patterns. Hence, we are facing a self-fulfilling prophecy.
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