system shock 2 research wihtout spending

Looking at the US residential construction sector, it is notable that both homebuilder sentiment and construction activity continued to improve in the second quarter.

Since the Fed is trying to constrain demand, it is natural to focus on interest-rate-sensitive sectors. We conclude the much-anticipated recession has not yet arrived. Business confidence surveys have slid lower – with the manufacturing index in contraction territory (see Exhibit 1). Simultaneously, Treasury tax receipts – a real-time measure of activity – have slowed. Growth has likely also been supported by the passing of legislation that have incentivised a surge in business investment in key technologies, clean energy and infrastructure. The economy has been supported by strong household spending resulting from rapid growth in earned incomes (in a hot labour market) and the tapping of excess savings.

This contraction in credit will be a significant headwind to growth and commercial real estate asset performance, and we will need to closely monitor the quarterly Senior Loan Officers’ Survey and small business surveys for the impact on credit conditions, and pass-through to the real economy. Higher deposit rates, required to prevent outflows to money market funds or Treasury bills, will severely constrain regional bank earnings, and reduce their capacity to provide credit to small businesses and commercial real estate. Regional banks still face a rise in the cost of funding that will hit earnings. Despite the resilience of US economic growth, there are reasons to be cautious about the outlook.

System shock 2 research wihtout spending