The Next Recession

Welcome to MktContext! I am a professional money manager, trader, and investor who has been timing and beating the market for over a decade. We specialize in predicting market direction by studying the economy and market signals. Join 13,000 subscribers at MktContext.com for our weekly deep dives and analysis!

Consumer behavior changes when macroeconomic conditions change. Every Fed hiking cycle sows the seeds of a recession down the road.

Since April, wage growth has lagged behind inflation, forcing consumers to cut back and borrow more. As the Fed keeps tightening, wages keep falling but inflation might remain persistent, squeezing households’ spending.

Household debt (credit cards, home equity loans, car loans) was rising even before this rate hike as consumers struggled to keep pace. Expect delinquencies to rise alongside interest costs.

The burden of interest payments remained flat despite 1.25% of Fed cuts in 2024-2025. Further rate hikes will quickly filter through to credit cards and auto loans, eventually triggering the next recession.

To be clear, recession remains distant. This analysis simply highlights how tightening financial conditions accumulate over years until a sudden shock breaks the economy.

Get the rest of this article, including our portfolios and trades, at MktContext.com!

Join 13,000+ investors who are timing the market!