The Full Economic Picture: Connecting Growth and Inflation to Long Term Interest Rates

Treść źródłowa

Today, I broke down every major growth and inflation data point and connected it to long term interest rates and asset prices. Real GDP is running at 2 percent, nominal at 6, and the Atlanta Fed Nowcast is at 3.7 with fixed investment adding 100bps. Personal interest payments are at highs but delinquencies are not rising, which tells you the consumer is more resilient than the bears want to admit. The full slide deck and the STIR replication playbook with all the code are available for paid subscribers.LIVESTREAM RECORDING FROM TODAY:Today’s Livestream: Main Talking Points1. Real GDP at 2 percent and nominal at 6 percent is a strong macro regime, period. Even if you assume the data is lagged, getting from 2 percent to recession requires a sustained deceleration that takes time. The Atlanta Fed Nowcast is at 3.7 percent. Fixed investment alone is adding almost 100bps. None of that is consistent with the recession narrative that has been getting cooked for two years.2. Consumption is 68 percent of GDP and the personal income and outlays data set is the monthly proxy for it. When the data prints monthly and matches GDP almost exactly, you can nowcast quarterly GDP in real time. Every major hedge fund uses credit card data on top of that to refine the estimate. The idea that there is a “hidden recession” not showing up in the data is a tell that someone has not built their own models.3. We are in reflation, not stagflation. Growth and inflation are both positive, which is the regime where equities rally. Stagflation requires growth decelerating into rising inflation. We do not …