Piper Sandler’s head economist, Nancy Lazar, has revealed that the US economy is currently facing a rare and complex situation. Large companies are benefiting from high interest rates and favorable financial conditions, while consumers are feeling the financial strain due to rising debts, high interest rates, and inflation eroding their wage increases.
Lazar believes that the US economy is currently navigating a “bifurcated” state that has only occurred twice before, both times leading to a recession. This challenging economic situation was observed during the energy crisis in 1978-79 and the Great Recession in 2008. The economist emphasized that the higher interest rates are essential to address excesses and inflation, eventually leading to a recession.
Lazar highlighted that large corporations are benefiting from increased interest rates, favorable financial conditions, stock market rallies, and government support. However, some of these benefits may not be enough to offset the negative impact of rising prices on consumers. Lazar expressed more concern about persistent inflation as it could lead to continued excessive spending and rising prices if not addressed through a recession.
