Albert Edwards of Societe Generale, not the most optimistic guy, threw a stone at the American economy. He believes that everything is not as rosy as it might seem at first glance. Here’s what he says: although everything is shiny on paper – unemployment is low, jobs are increasing, the stock market is growing stronger, and the economy seems to be singing out loud – but this is just the tip of the iceberg.
According to him, judging by the number of bankruptcies, which jumped up this year as if on a springboard, things are not going well. Statistics say that there have not been so many failures since 2010. Small business bankruptcies are up a whopping 61%, and this appears to be just the beginning. Edwards hints that sad music will begin when the government aid that has kept many afloat during the pandemic ends.
The Fed’s interest rate hikes, he argues, have put a dent in those already in trouble—as a result, many small firms that were hanging on by a thread are now at risk of missing out on the loans they desperately need.
But here’s the interesting thing: despite these frightening facts, it’s hard to say that the economy is in recession, because the overall numbers say that business is working as it should. In addition, in new economic cycles the situation with company ratings is usually worse – their problems are more pronounced, and now it is not as bad as it could be. So, although the signs of a recession are still in the air, it is too early to say that it is already on the doorstep.