From economist Joe Carson's The Carson Report, January 1:
The inverted Treasury yield curve has raised concern over the risk of recession in 2023, and for a good reason. An inverted yield curve has occurred before the past eight recessions. Yet, something is awry. Banks are not restricting credit as they typically would with an inverted yield curve, and businesses and consumers are borrowing at banks at the fastest rate in fifteen years. What's up?
The thinking behind the inverted yield curve is that banks slow and eventually stop lending when bank funding costs exceed what banks can earn by lending. Yet, bank credit has been accelerating throughout 2022. The latest data for November shows bank lending to businesses, real estate, and consumers rising 11.8% over the comparable period one year earlier. That's the fastest annual growth since 2007....
....MUCH MORE
We will be referring back to this rather astute observation after the next CPI report (or five).
Some previous visits to The Carson Report:
December 2A "Pain-Free" Tightening Cycle For Companies Is Not How Fed Tightening Cycles End
Our boilerplate introduction:The author, Joe Carson is the former Chief Economist & Director of Global Economic Research at Alliance Bernstein. Prior to that he was Chief Economist at Chemical Bank and at Dean Witter, firms he left in such rough shape they were forced to merge with JPM and MS respectively. (Just Kidding Mr. C.)...
September 30"Is Deflation A Risk, Or Are These Prognostications A Spurious Call For A Fed Pivot?"
June 22
"Peak Inflation Is Hollow: It Provides No Context To Reduction in Speed or Duration of Cycle"
