US bank credit is now down -0.45% year-on-year, a crash in any man’s book:
Total credit is beginning resemble the GFC:
It is banks of all sizes:
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This is particularly difficult for households and SMEs.
JPM adds more problems, noting that US household excess savings are gone:
…lower income cohorts are increasingly coming under pressure with fewer offsets and with little sign of relief from the high cost of capital environment (e.g. revolving credit card balances keep moving higher, student debt payments kicking in).
The fiscal impulse is flattening out into 2024 as well. Corporate savings are still high and earning good returns, but that will only mitigate earnings downside if the consumer chokes.
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With an FCI tightening from the rising DXY, bond steepener, falling foreign profits and stocks, and the above, the US economy could easily slip into recession in 2024.
Jeremy Grantham is making good sense on such an outcome:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
