More signs of a US economic slowdown in 2024 | by Simon Constable | January 2024

Frederick John Skill The Illustrated London News, CC BY 4.0, via Wikimedia Commons. Distress in Coventry, distribution of soup to distressed weavers in St Mary’s Hall kitchen circa 1861

Despite some horribly wrong predictions, there hasn’t been a recession since the COVID-19 pandemic. But recent weeks show that things are changing for the worse.

It’s something investors should consider carefully because some assets do better than others in a recession, history shows.

At the top of the list today is abysmal growth in commercial loans and leases. It’s the measure of credit growth that many people realized was the key to any growth during the Great Recession of 2007-2009.

At the beginning of this year, in December 2022, the growth of loans and leases from commercial banks showed an annualized increase of about 11.7%, according to data from the Federal Reserve Bank of St. Louis.

It has been on a downward trend since then. By November, the annualized growth rate had settled at less than one-third of one percent — 0.3%, to be exact.

This is well below the annualized rate of inflation recorded in November, which was 3.1%, according to Trading Economics.

Perhaps more importantly, the real, or inflation-adjusted, volume of loans and leases is falling.

If the growth rate of these types of loans kept pace with inflation, then we would expect annualized growth of around 3.1% in November. Not us. We got about one tenth.

Even worse, even if the US banking sector were to grow its lease and loan books by 3.1%, adjusted for inflation, that would be zero growth.

The important thing about these key indicators is that the economy simply cannot grow without sustained growth in lending and leasing. And if the growth of loans and leases does not keep pace with inflation, then the economy will essentially contract. Simply put, if this trend does not change, we will most likely see a recession.

There is another key indicator that tells us a similar story.

The amount of money in the economy is growing rapidly. Money includes notes and coins, but also bank deposits and the like. Measures known…

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