The US economy is currently in a critical moment. It is caught between high inflation rates as well as recession fears. As the world’s largest economy surges after the pandemic, which trend will prevail through to the end of the year?
The third quarter’s Gross Domestic Product (GDP), which rose to 2.6 per cent, pulled the US economy from a technical recession that had gripped the country for the first two quarters. This growth is partly due to the strength of the employment market. The pandemic has receded gradually into the past. However, there are still fears of a recession according to a Federal Reserve survey.
The October 2022 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reveals that most banks believe there’s a probability of greater or equal to 40 percent that a mild to moderate recession would occur in the next 12 months.
The trend towards rising interest rates and credit restraints was evident in tighter loan standards, and lower demand for commercial and industrial loans to business and commercial real estate during the third quarter. According to…