RECESSION PROOFING How To Benefit From a Lull in the Economy By Jim Reber, President and CEO, ICBA Securities Tell me if you’ve heard this: An inverted yield curve is highly correlated with a subsequent recession. And might I point out that the U.S. treasury curve has been upside down pushing two years now? Since we’re playing master of the obvious, let’s mention that the Fed — while not quite ready to start cutting rates — seems satisfied it’s laid the groundwork for inflation to get back in the 2% box that has proven elusive for several years. The press release following the Jan. 31, 2024, FOMC meeting stated, “The risks to achieving its employment and inflation goals are moving into better balance.” To be sure, the economy still seems to be chugging along quite nicely, thank you. As of this writing, there are “three” handles on several of the more critical economic barometers, which is a pretty good trick to pull off for an economy supposedly being dragged down by a restrictive monetary policy. Fourth quarter gross domestic product has run around 3.2%, the aforementioned inflation (the Fed’s preferred index is “Core PCE”) is sticky at 3.9% and unemployment boasts an impressively low 3.7%. This is not the stuff of an economy that’s about to run off a cliff (probably). On the Other Hand Of course, we’ve been getting a steady diet of not-so-positive news, too. The U.S. went blowing through the $1 trillion level in credit card debt in December 2023 and continues to pile onto that record. Delinquencies on consumer borrowings, particularly with the younger-aged cohorts, have NEBRASKA INDEPENDENT BANKER 17
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