Fed delay of rate cuts will cause 'no landing then crash': State Street

Our assessment of particularly U.S. economy is that it’s still fairly robust. There are parts of the economies that are really struggling, but overall on average we’re seeing enough strength, we’re seeing enough. I mean that’s fueling inflation, right. So that makes it very, very difficult for central banks to start cutting cycle. And even though market is somewhat relaxed by this idea that OK will delay cuts, they’re still coming, they come a bit later. I think they have real economic costs because companies are finding it’s much harder and much more expensive to refinance their debt. Consumer are struggling to find any, any debt the only. Consumer borrowings that is increasing in US is actually on credit cards at 2520% interest rates. CapEx is slowing, uncertainty and rising. So delaying cuts has real economic impact. So even though for now we’re kind of staying on kind of level path, not cutting interest rates create economic problems down the line. So no lending and then crash. I think that’s quite likely economic outlook in our opinion, quite a bleak outlook for an economy that is doing so well and obviously we’re going to be LED elsewhere by the United States. I I hear what you’re saying about the debt situation and in the cost of finance for a lot of people. But when I look at the average wages, I look at employment cost index, I look at average increases year on year in salaries and what have you, actually people are offsetting that increase in financing costs. We’ve increased salaries, aren’t they, Maria? Oh yes. And I think that as I was saying that that is real challenge, but I mean we increasingly begin to hear about things breaking down. So like think about corporate earnings and I think that’s like a really good case in point. So if you think about consumer companies that reported, think of, I don’t know Starbucks, McDonald’s, even Amazons of this world, the retail side is really struggling. Consumers are really pinching pennies and that’s making it difficult. I mean Amazon, I find it really fascinating example is like real microcosm of what’s happening in economy and. Stock market, the retail side of Amazon actually didn’t do that well. It’s a tech side that done fantastically well and that’s your 222 kind of two tier stock market where tech is doing well. Everything else not so well in terms of earnings or real economy where. Parts of the economy are doing fantastically well like like the things you cited like wages are still OK, labor market is still fine and other parts are like smaller firms hiring or you look at like industrial productions things like that, they’re beginning to struggle. So I think there are those two tier economy is really problematic and huge problem for for Chairman Powell and the rest of his colleagues.