RE:RE:Economic OutlookYes Jay very true.....the problem with the timing of interest rate changes by Central Banks is because there has been increasing pressure on them to react to short term/current economic conditions (the Fed saying it is "data dependent") when any monetary theory economist knows full well that the lags associated with changes in monetary policy (ie the money supply) are very long.
This means that when the Fed "pivots", the effects of past rate hikes have not yet been felt in the economy. Part of the formula to calculate the money supply is the speed at which money changes hands. So in higher interest rates, this speed slows down causing lower economic activity which in turns feeds on itself and reduces the money supply further and then typically results in a recession.
The current situation in the US is compounded by "Biden Economics" which is code for Government massive stimulus or in other words budgetary deficits of 2 trillion a year and growing according to the CBO projections.
The reason that I said before that I believe that the recession in the US (if it happens) will be shallower than Canada is primarily due to the differences in the housing markets. In the US, people have access to long mortgage renewals of up to 30 years which many people took advantage of in the US. In Canada, the mortgage renewals are much shorter, typically 3-5 years and so more people, rleatively speaking in Canada will face higher mortgage costs resulting in less spending elsewhere.
In a number of posts, I have talked about fixed income and as advice to people here, if you not already understanding the use of these types of investments especially in a situation where interest rates have risen and will likely fall over the short run, you need to educate yourself.
Why?
Because you are missing out on the potential to make low risk money when stock prices are going down and then use this extra money to reload when the economy recovers.
As an example, I have mentioned in past posts my investment in ENB.PR.H which I bought a while back in the low $17s. Even if interest rates stay constant over the next year I will make about 16% with almost zero risk. Since the Fed has signalled that it will be reducing interest rates next year, this number will likely be in the 20s - not bad in my books for a low risk investment.