3 ms·
Usually, it does equal a slowing economy. But IMO there's a difference this time in that a lot of economic "growth" was being carried out by businesses that cou
by lenerdenator 3y ago
Usually, it does equal a slowing economy. But IMO there's a difference this time in that a lot of economic "growth" was being carried out by businesses that couldn't exist in a reasonable interest rate environment (which is exactly what Jerry Powell's environment is) and honestly just wanted to cash out.
Think of how many startups only existed to set money on fire until they completely captured a market, or how many got bought by the likes of FAANG+MS just to only kind-of have an integration into products/services that were made.
This has just been a return to the normal rules of business: you need to be able to create a return on investment in a reasonable amount of time, and with a reasonable amount of resources.
- alephnerd 3y agoLargely it's this point below from the article: "The obvious one is fiscal policy, with governments everywhere using budgetary stimulus more actively since the pandemic. The impact of higher interest rates has been dampened in two ways. First, consumers had high levels of liquid assets (sometimes called “excess savings”) left over from the pandemic, which provided a financial cushion that protected their spending power. Second, governments have been deploying additional funds since COVID-19, such as the large energy support programmes in Europe and Bidenomics in the US (big tax subsidies that encouraged US companies to invest heavily in green energies). These funds have supported incomes and employment, even as monetary policy engineered a squeeze" ----- People on here are overstating the impact of a handful of software companies and buzzwords on the larger economy.