Real retail sales continue to grow at above trend (dotted line below), showing little impact from higher interest rates.
CSBS community bank survey shows a strong up-turn in business conditions in the second half of last year.
The latest Fed Beige Book report is also more upbeat:
The snow may cover the ground, but the signs from the Beige Book suggest the Federal Reserve districts are pretty happy with the economy and remain concerned about inflation. Textual analysis of today’s report showed a clear rise in focus on prices and a positive assessment of the US economy. On the basis of the apparent message from today’s report, expectations of rate cuts in H1 2024 may be wound back. ~ Meyrick Chapman
Conclusion
We no longer expect a recession before the November 2024 presidential elections.
Acknowledgements
Meyrick Chapman, Hedge Analytics Ltd: Beige Book – Inflation & Growth Rise Again
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.