Bank of America analysts warn that the U.S. economy could be headed for a "no landing" scenario thanks to the hot labor market, but that might not be good news for the stock market. BoA chief economist Michael Hartnett predicted a "no landing" scenario in the first half of the year, where there is no immediate slowdown in growth but inflation remains above trend. That would likely force the Fed to raise interest rates much higher than previously forecast — and keep them elevated for longer.

In this episode of The Higher Standard, Chris and Saied examine this news and what it could mean for the economy as a whole.

They discuss comments from Equity Group Investments founder and chairman Sam Zell, stating that Jerome Powell "missed the boat" on inflation, allowing "super-low" interest rates to exist for too long.

Chris and Saied look at a warning from economist Mohamed El-Erian that the Federal Reserve won’t be able to get US inflation down to its 2% target without “crushing the economy.” He added that the central bank is unlikely to officially change that goal post.

They also offer some thoughts on a tweet from Charlie Bilello, Chief Market Strategist for Creative Planning, LLC, indicating that only 21% of homes for sale in the US sold above their final list price in the last 4 weeks, down from 40% a year ago. This is the lowest % since March 2020.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why holding rates for a prolonged period of time will create mental strain for people.
• The definition of a 'hard landing,' and what it means for the economy.
• Why household debt saw its largest increase in 20 years in New York.
• Whether the FOMC has the courage, after holding rates for 6-8 months, to raise them again.
• And so much more...

Resources:

The Real Deal via Instagram

"Bank of America Says Stock Market Threatened With 'No Landing' Scenario" (article from Entrepreneur)

"All aboard the mortgage rate roller coaster" (The Data Deli via Instagram)

"Fed Can’t Reach 2% Inflation Without Crushing Economy, El-Erian Says" (article from Bloomberg)

Charlie Bilello via Twitter

"Americans Have Nearly $1 Trillion in Credit Card Debt" (article from Bloomberg)

"Investors Worry Too-Hot Economy Will Put Fed on More Aggressive Rate Path" (article from The Wall Street Journal)