We no longer think the U.S. economy will be able to avoid a recession. Credit standards already had deteriorated significantly before the Silicon Valley Bank failure, and the likely further significant tightening in the wake of the crisis will be the final straw. 1/5
Pantheon Macro
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- Pantheon are donating £500 to @comicrelief today, and will increase this by £5 for every like/share this video gets, up to a max £1k. Special thanks to @IanShepherdson @mc_economist @andres__abadia @samueltombs @ClausVistesen & @freyabeamish vimeo.com/525578592 #RedNoseDay
- Replying to @PantheonMacroWe now see U.S. GDP falling by 1½% annualised in Q2 and Q3, respectively, before rebounding only slightly in the fourth quarter, with a 1% increase. This change in the economy will prompt a shift from the Fed, eventually. 2/5
- Replying to @PantheonMacroThe good news is that the recession will not be anywhere near as grim as the crash in 2008, because private sector balance sheets are in much better shape. 5/5
- Replying to @PantheonMacroWe see three 25bp rate cuts this year, in September, November and December, followed by 100bp next year. This will be enough to revive growth next year, but in the near term, we now think the economy faces a setback. 4/5
- Replying to @PantheonMacroWe still think the FOMC will lift its policy rate by 25bp next month, but this will be the last hike. We then think the Fed will be on hold until September, at which point conditions will force a reversal. 3/5
- "The Fed can’t Hold the Hawkish Line Much Longer; Data won’t Let Them" @IanShepherdson ow.ly/GenY50Myyh6 #PantheonMacro
- Replying to @PantheonMacroWe think activity in the housing market will be crushed to such an extent that discretionary activity will all but disappear. This will leave demand driven solely by people purchasing for job relocation reasons, or out of family necessity.
- "Four Reasons to Expect Core Inflation to Plunge Over the Next Year" @IanShepherdson ow.ly/Q3eB50JlmON #PantheonMacro
- "Risks Abound for the January Core CPI, but 0.4% is a Decent Bet" @IanShepherdson ow.ly/2KQm50MRxBL #PantheonMacro
- Replying to @PantheonMacroThis is what happens when the monthly payment needed to buy a median-priced home increases by just over 50%—roughly $840—in a year.
- Last week’s U.S. #employment report wasn’t pretty reading. Non-farm #payrolls fell by 701K, lifting the #unemployment rate by 0.9pp, to 4.4%. Unfortunately, the numbers are about to get worse, by several magnitudes.
- We had hoped that the decline in U.S. housing demand would flatten towards the end of the year, but the 130bp leap in mortgage rates in the past six weeks has forced us to abandon this idea.







