Yes, reasonable people believe that the last Fed rate hike cycle is done; It’s been the fastest cycle in the more recent history of the FED, and now they consider that inflation wasn’t transitory at all, but it will rather stay for a prolonged period of time.
The official US leading indicator tells us a recession is a done deal, the chapter is closed. However, there is conflicting situation. How can the economy be in recession when payrolls and GDP are still growing and so much of the other data looks if not robust. Let’s look at some details.
To illustrate how unprecedented recent events were, once chart the unit cost and price series. This shows that always prior and into recessions, unit prices do not keep up with unit costs (i.e., the dotted line rises above the red line) and hence unit profits fall. But not this time. It doesn’t look like there is much difference between the two series in the chart below, but this last couple of years the gap has been sufficient to propel profit margins to record highs.
For now, not only the cost of living is increasing and putting the social cohesion at risk, but more importantly, should the recession last, the inflated corporate profit margins may collapse too and there, the consolidation might be as painful as the loss of the social cohesion.