Soft landing or hard landing for 2023?

[milford]

Copied from a message board.

Interest rates have been at a ridiculously low level for over a decade. Moving from this level to a more historically normal level in such a short period of time will create a huge shock. Lower interest rates leads to more borrowing & higher prices, higher interest rates leads to lower prices & less borrowing.

People who are heavily leveraged will not be able to pay their debt at higher interest rates. Prices will take time to be corrected to a more suitable level to balance out with the higher interest rates. This will be a painful transition.

There has been no shock with the huge rate increases because we started at historical lows also unless you have ARM mortgages/loans it won't affect you because most people are locked in for fixed rates for (5-30 years) so they are even coming out ahead if they have some cash flow to take advantage of the delta of their low interest rate mortage/loan vs. the current high interest rate for savings. The economy is humming along its going to take high interest rates for a while before cracks start to show up.

 

[target2019]

We're taking part in the soft landing now, which will turm out to be two softs = one hard.

The shovel is Fed interest rates.

That is the land-based theory. People in boats can modify this.

 

[frayne]

Not hard, not soft but bumpy.

 

[Lsbcal]

FWIW, Jamie Dimon (Chase CEO) thinks a soft landing is still possible. He is privy to a lot of financial data.

 

[target2019]

And he's worried about "scary stuff."

https://www.entrepreneur.com/busine...-landing-possible-warns-of-scary-stuff/446384

JPMorgan CEO Jamie Dimon believes the U.S. economy could still experience a "soft landing" after recent instability but warns of several uncertainties ahead.

 

[marko]

Not hard, not soft but bumpy.

How about lumpy: Soft in some places, hard in others? I suspect not everyone will be affected the same way. Some may prosper nicely while others die.