9 Charts Suggesting a Pending Recession, Not a Soft Landing

There is a great deal of debate amongst economists right now about which is more likely for the U.S. economy: a soft landing or a recession. This week,?The Wall Street Journal ?focused on said debate with an article entitled: “Why a Soft Landing Could Prove Elusive ”. In my opinion, the opening paragraph says it all: “On the eve of recessions in 1990, 2001, and 2007, many Wall Street economists proclaimed the U.S. was on the cusp of achieving?a soft landing, in which interest-rate increases corralled inflation without causing a recession.”?As the discourse heats up, here are 9 charts suggesting a pending recession, not a soft landing, especially if you subscribe to the notion that consumer confidence is the key determinant.?Winter is coming.

1) Crude oil prices are soaring again and could potentially hit $100 per barrel this year with prices expected to rise as we head into colder months. Source:?Federal Reserve Bank of St. Louis

2) Consumer credit card balances have topped $1 trillion and the interest rate on that debt is over 20%. Source:?Federal Reserve Bank of New York

3) Auto delinquencies for prime and subprime borrowers are already higher than 2008/2009 levels. Source:?The Wall Street Journal

4) Servicing the debt on almost $2 trillion of outstanding student loans will commence starting next month after a three-year hiatus. Source:?The Wall Street Journal

5) Housing prices are at record levels. So many borrowers have "locked in" low fixed-rate mortgages—forcing a shortage of housing stock available to first time homebuyers which is keeping prices higher than would otherwise be the case. Source:?Redfin

6) Rising borrowing costs, steeper yield curves, and an upcoming commercial real estate refinancing "wall" are conspiring to put regional and community banks under stress. SVB, Signature, and First Republic were the first causalities. There are many others out there as captured by recent ratings agency downgrades.?A further 50 bp increase by the FED would add to that stress on non-money center banks. Source:?Bloomberg News

7) Interest on US debt obligations is approaching $1 trillion per annum and total debt has surpassed $33 trillion on a path to $50 trillion unless congress acts.?Source:?Federal Reserve Bank of St. Louis

8) De-globalization is leading to higher inflation. Whether it's BREXIT in Europe or "de-coupling with China",?the West's ability to "export inflation" to the global south has been much reduced by the recent "anti-trade" political agendas. Source:?The New York Times

9) Whether it's the unexpected $100 billion+ in aid to Ukraine or the larger defense budgets made necessary by the China/Taiwan threat, increased defense spending by the US and its NATO allies is putting further unexpected pressure on inflation. Source:?McKinsey & Company