May 21, 2024
The idea that rising rates can stimulate the economy is a fringe economic theory that appears to be getting more attention.1 A record amount of interest-bearing assets on household balance sheets help show how, aided by increasing interest payments from the US federal government. Our view is that higher rates are simply doing less economic damage than in the past. There are two secular shifts unique to this cycle that help explain why – fixed rate mortgages and a record number of retirees.
(1) As of 22 May 2024. (2) Bloomberg. Quarterly data through Q1 2024.
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