Report
Could rising interest rates cause a cyclical downturn in the United States?
A common claim is that the increase in interest rates that has already taken place in the United States and fears of a potential further increase by the Federal Reserve explain the cyclical downturn that appears to be on the horizon in the United States. But we have difficulty believing that the (actual and expected) increase in interest rates could explain or trigger a cyclical downturn : Interest rates are going to remain much lower than nominal growth; Debt interest payments remain very low; The rise in long-term interest rates is not recent - it dates back to 2013; Other causes of a cyclical slowdown exist: Uncertainty due to protectionism, the US government shutdown and cyclical developments in the rest of the world; The widening of credit spreads (corporate borrowing costs) due to this uncertainty ; The saturation of needs for capital goods, durable goods and housing
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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