The chart below from today's Early Look by Daryl Jones shows why three or four rate cuts are probably not enough to make much of a difference for struggling Americans.
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Recognizing the continued weakness in the lower end consumer, or really median consumer, may be one key reason that Jay Powell continued to be adamant about rate cuts in the foreseeable future. As we highlight in the Chart of the Day, the problem is that three or four cuts are probably not enough to make much of a difference. We noted on the chart: “Rates moved from 0 to 5% at the fastest pace ever, leaving little cumulative borrowing in between. For households or small business vulnerable to rates who were viable at 0%-2% but are progressively bleeding out at 5.5% … is 1 or 2 or 4 cuts really going to make a difference? (they need like 15 cuts!). For that cohort, the bleed is likely to continue.” |
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